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00:00 Speaker A
Sheila, it is great to see you. So let let’s start there. President Trump, we know he’s, he’s zeroed in on this issue of affordability, um, like this temporary cap on on credit card rates. Got a new Bloomberg report, they’re citing sources, Sheila, saying that Bank of America and City thinking about offering cards with a 10% rate. What do you think, Sheila? Smart idea, smart policy?
00:30 Sheila
Well, I think it 10% is a pretty low rate, but the rates there now, the average is like 22 and a half% is pretty ridiculous.
00:46 Sheila
And a point of fact, banks have kept credit card rates even high, even when the Fed was lowering rates to try to stimulate the economy. It wasn’t trickling down. So I think there’s a lot of room to cut there without having to withdraw credit. A lot of these doom and gloom arguments being made by banks are really based on their own kind of self-serving argument. Well, we’re going to pull back, you know, we’re going to eliminate 80% of people or whatever from credit cards if we get this interest rate cap. So I I think that’s not well substantiated. There are studies, a Vanderbilt study that says even at 10%, they could serve uh the vast majority of their customers.
01:24 Sheila
So, um, I I think the truth lies somewhere in the middle like most of these issues, but at least this is put a spotlight on how really high credit card rates are. Certainly historically they’re very high and the questionable justifications that the banks are providing for keeping them that high.
01:45 Speaker A
It is interesting, Sheila. I mean, you’re kind of hard pressed to think of many areas where Donald Trump and Senator Elizabeth Warren can find agreement, but the good Senator is there, uh saying she wants a law passed to get a cap on credit card interest rates. She seems to dismiss these concerns that that the big banks have brought up here. It is interesting where these two can find some common ground.
02:14 Sheila
Right. Yeah, well, it’s the populist left meeting the populist right is probably banks banking’s worst nightmare. I mean, I think you’re kind of seeing now that this administration is a mixed bag uh for banks. So they’ve gotten a lot of deregulation, a lot of irresponsible deregulation as far as I’m concerned. But now they’re coming after them in different ways and credit cards really are at the top of the list. It’s a pain point for retailers, it’s a pain point for consumers. So it’s smart politics to go after them, but we’ve got this de-banking lawsuit, uh crypto, you know, the there’s a big fight between the banks and the crypto industry over uh how to regulate crypto and that’s all about competitive relative competitive advantage to banks. The administration is clearly on the crypto industry side. So this is definitely a mixed bag, this administration for banks and they’ve got their work cut out for them, I think, on some of these policy issues.