US financial stocks fall after Trump calls for credit card rate cap

• Top U.S. banks fell 2.2-3.6% (JPMorgan -3.2%, BofA -2.5%, Citi -3.6%, Wells Fargo -2.2%), while credit card specialists tumbled 8-10% (Synchrony, Bread Financial, Capital One)
• Analysts say the rate cap threatens key bank revenue streams and could force lenders to reduce credit lines or cut access entirely, potentially pushing consumers to payday lenders and pawn shops
• Implementation likely requires Congressional legislation and may exceed presidential authority; timing coincides with major banks reporting Q4 earnings this week starting with JPMorgan on Tuesday

Summary: US Financial Stocks Fall After Trump Proposes Credit Card Rate Cap

Key Development:

U.S. financial stocks declined sharply in premarket trading on Monday following President Trump's announcement of a proposed one-year cap on credit card interest rates, effective January 20. No implementation details were provided.

Market Impact:

• Major Banks: JPMorgan Chase fell 3.2%, Bank of America dropped 2.5%, Citigroup declined 3.6%, and Wells Fargo fell 2.2%
• Credit Card Specialists: American Express tumbled 4%; specialized lenders Synchrony Financial, Bread Financial, and Capital One dropped 8-10%
• Payment Processors: Visa slipped 1.2%, Mastercard fell 2%
• BNPL Sector: Affirm shares rose 10.3% as analysts suggested buy-now-pay-later firms could benefit

Analyst Commentary:

JPMorgan analyst Vivek Juneja warned the rate cap wouldn't address underlying problems and could push consumers toward more expensive alternatives like pawn shops and non-bank lenders. Analysts noted similar proposals have been raised previously without congressional action, and implementing such a cap may exceed presidential authority and require legislation.

Brian Jacobsen of Annex Wealth Management cautioned that lenders unable to price risk properly would likely reduce credit lines or restrict access entirely, potentially benefiting payday lenders and BNPL firms.

Context:

The announcement comes as the U.S. banking sector prepares to report fourth-quarter earnings this week, with JPMorgan Chase reporting Tuesday, followed by Bank of America, Citigroup, and Wells Fargo. Credit card interest represents a key revenue stream for banks and lenders, making this proposal a significant threat to profitability.