Reviewed by Gotrade Internal Analyst
Jakarta, Gotrade News - Wall Street is catching heat after President Trump proposed a major cap on credit card interest rates. This move is rattling financial markets and threatening the Federal Reserve’s independence.
Key Takeaways
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Trump proposes a 10% maximum cap on credit card interest.
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Banking sector faces a potential $100 billion revenue loss.
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DOJ investigation into the Fed sparks bond market anxiety.
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Trump plans to limit credit card interest to just 10% annually starting January 20. Current average rates are hovering between 19% and 21.5% nationwide.
Researchers at Vanderbilt University claim this could wipe out $100 billion in bank revenue. Shares of American Express Company and JPMorgan Chase & Co. plummeted following the news.
The President is also pushing the Credit Card Competition Act to slash merchant fees. He aims to boost consumer spending power ahead of the upcoming midterm elections.
JPMorgan Chase & Co. CEO Jamie Dimon warned that this could actually kill credit supply. Low-income consumers might lose access to essential loans entirely.
The sell-off hit other big names like Citigroup Inc. and Bank of America Corporation. Investors are worried about a massive dent in net profits for Wells Fargo & Company.
Tensions are rising over a DOJ investigation into Fed Chair Jerome Powell. This political move is shaking investor confidence in the global bond market.
CEO of The Bank of New York Mellon Corporation, Robin Vince, said this could push borrowing costs up. Market stability depends on the central bank's freedom from government interference.
According to reports from AP News, Trump is doubling down on his proposals. He believes these actions are necessary to lower the cost of living for Americans.
Read also: US Tariff Revenue Drops: A Sign of Trade Contraction?
Wall Street is now gearing up for a major legal and political showdown. Investors should expect high volatility in the financial sector this week.
Reference:
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AP News, Wall Street executives warn Trump: Stop attacking the Fed and credit card industry. Accessed on January 14, 2026
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Featured Image: Shutterstock
Disclaimer
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