US financial stocks stumbled Monday after President Donald Trump lobbed a populist grenade into Wall Street’s trading pits, suggesting he wants to cap credit card interest rates at 10 percent a year—roughly half today’s levels.
The market reaction was swift and unsentimental: JPMorgan Chase slid 2.5 percent in early trading, Bank of America fell 1.6 percent, Citigroup tumbled 3.7 percent, and Wells Fargo dropped 1.5 percent, as investors recalibrated risk at machine speed.
The proposal, announced via Trump’s social media platform Truth Social on Friday, calls for a one-year cap starting January 20. It came wrapped in trademark rhetoric, with Trump accusing card issuers of “ripping off” consumers by charging 20 percent to 30 percent interest, practices he said festered under the Biden administration. The date, he noted pointedly, would coincide with the anniversary of his presidency.
Markets, however, quickly separated politics from probability. Analysts were blunt: presidents don’t set interest rate ceilings—Congress does.
“It would take an Act of Congress for such rate caps to be in place,” UBS Global analysts wrote, adding that any executive action would likely trigger immediate legal challenges. With lawmakers divided and banks wielding formidable lobbying power, passage looks improbable.
But improbability didn’t spare bank stocks. Credit cards are among lenders’ most lucrative businesses, delivering fat margins that help offset slowing loan growth and rising defaults elsewhere. A hard cap, even temporary, would threaten that profit engine, potentially forcing issuers to slash rewards, tighten credit standards, or push riskier borrowers out of the system altogether.
There is also a broader concern simmering beneath the selloff: regulatory déjà vu. Investors remember that today’s “just an idea” can become tomorrow’s policy platform, especially in an election year where economic pain points make easy targets.
Wall Street is now treating Trump’s proposal as headline risk rather than imminent law. But Monday’s slide was a reminder that in modern markets, rhetoric alone can move billions.
Even if the cap never materializes, the message was received: political uncertainty remains an under appreciated variable in bank valuations—and traders are pricing it in, one headline at a time.
