WASHINGTON–Although President Trump’s Jan. 20 deadline for credit card issuers to put a 10% APR cap in place for one year has now come and gone, America’s Credit Unions said it spent considerable time in the lead-up to that deadline meeting with representatives on Capitol Hill to voice its opposition and with its own membership to answer questions and provide “good advice.”
But, as the CU Daily reported here, there has been little follow-up direction from the White House other than a statement that the 10% cap is the president’s “expectation.”
Separately, other administration officials have floated a proposal for a new credit card product dubbed a “Trump card” as an alternative is sought to the proposal. An administration official has said there have been discussions with “big banks” about the idea, but no other details have been provided.
There has also been some speculation Trump may again address the issue while in Davos, Switzerland, for the World Economic Forum.
“I think the good news for credit unions is we are much closer than our for-profit counterparts in the product offerings that we have to the objective of the president’s,” said Scott Simpson, president and CEO of Americas Credit Unions. “We’ve got several credit unions that have card offerings already well below 10%.”
Litigation Likely
As The CU Daily has also been reporting, had the president issued an executive order instituting a 10% credit card cap, many analysts have said there certainly would have been litigation filed challenging the EO, beginning with the president’s authority to implement such a cap.
Ann Petros, VP-policy engagement and credit union operations with America’s Credit Unions, indicated the trade group was not involved in any direct discussions of such a lawsuit, but said she anticipates there could certainly be such a response to any executive order or other action taken by the president that sidesteps legislative action on the issue.
“We just don’t see justification or law that would permit such action,” she said.
Such litigation remains likely should Trump sign such an EO.
Ohio CU League Joins Groups in Opposing Proposal
Separately, the Ohio Credit Union League has joned with the Ohio Bankers League, the Community Bankers Association of Ohio, and the Ohio Chamber of Commerce in issuing a joint statement in response to the proposed 10% APR cap.
“While we appreciate elected leaders’ efforts to increase affordability and spur economic growth, government-imposed price controls will unfortunately create more problems than they solve, The statemen reads. “By imposing a cap on interest rates, the government would force lenders to reduce access to credit, which would curb consumer spending and force many Ohioans to turn to riskier, more costly lending alternatives. Ohioans deserve more economic choice and financial freedom, not less.”
The organizations further said that according to new data, a 10% cap on credit card interest rates would lead to a drastic reduction in credit for up to 159 million Americans and up to 5.5 million Ohioans.
“While a proposed interest rate cap may be intended to lower costs for Ohioans, its implementation would in fact have harmful effects on Ohio consumers and the state’s economy, ranging from lower credit limits to higher fees,” the groups said.
