NEW YORK (AP) — Up until this week, Wall Street has generally benefited from the Trump administration’s policies and has been supportive of the president. That relationship has suddenly soured.
When President Donald Trump signed the One Big Beautiful Bill into law in July, it pushed another significant round of tax cuts and also cut the budget of the Consumer Financial Protection Bureau, at times the banking industry’s nemesis, by nearly half. Trump’s bank regulators have also been pushing a deregulatory agenda that both banks and large corporations have embraced.
But now the president has proposed a one-year, 10% cap on the interest rate on credit cards, a lucrative business for many financial institutions, and his Department of Justice has launched an investigation into Federal Reserve Chair Jerome Powell that many say threatens the institution that is supposed to set interest rates free of political interference.
Bank CEOs warned the White House on Tuesday that Trump’s actions will do more harm than good to the American economy. But in response, Trump did not back down on his proposals or attacks on the Fed.
BNY Chief Executive Officer Robin Vince told reporters that going after the Fed’s independence “doesn’t seem, to us, to be accomplishing the administration’s primary objectives for things like affordability, reducing the cost of borrowing, reducing the cost of mortgages, reducing the cost of everyday living for Americans.”
“Let’s not shake the foundation of the bond market and potentially do something that could cause interest rates to actually get pushed up, because somehow there’s lack of confidence in the Fed’s independence,” Vince added.
The Federal Reserve’s independence is sacrosanct among the big banks. While banks may have wanted Powell and other Fed policymakers to move interest rates one way or another more quickly, they have generally understood why Powell has done what he’s done.
“I don’t agree with everything the Fed has done. I do have enormous respect for Jay Powell, the man,” JPMorgan Chase CEO Jamie Dimon told reporters Tuesday.
Dimon’s message did not seem to resonate with President Trump, who told journalists that Dimon is wrong in saying it’s not a great idea to chip away at the Federal Reserve’s independence by going after Chair Jerome Powell.
“Yeah, I think it’s fine what I’m doing,” Trump said Tuesday in response to a reporter’s question at Joint Base Andrews after returning from a day trip to Michigan. He called Powell “a bad Fed person” who has “done a bad job.”
Along with the attacks on the Fed, President Trump is going after the credit card industry. With “affordability” likely to be a key issue in this year’s midterm elections, Trump wants to lower costs for consumers and says he wants a 10% cap on credit card interest rates in place by Jan. 20. Whether he hopes to accomplish this by bullying the credit card industry into just capping interest rates voluntarily, or through some sort of executive action, is unclear.
finance.yahoo.com
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