Citi CFO Warns Trump's Credit Card Cap Could Harm Economy

As President Donald Trump prepares to take office, a major banking executive is raising alarms about one of his key policy proposals. Mark Mason, Chief Financial Officer of Citigroup, has issued a stark warning about the potential economic consequences of capping credit card interest rates.

The proposal, which would limit credit card interest rates to 10%, has drawn immediate scrutiny from the financial sector. Mason's concerns center on how such a cap might affect the very consumers it aims to protect.

Speaking during the bank's fourth-quarter earnings call, Mason delivered a clear message: while affordability is crucial, this particular approach could backfire spectacularly.

Mason's opposition stems from a fundamental belief that the cap would restrict access to credit rather than expand it. During a call with reporters ahead of the earnings announcement, he repeatedly emphasized this point.

An interest rate cap is not something that we would, or could, support, frankly.

The CFO explained that consumers with lower credit scores or limited credit history often face higher rates because they represent greater risk to lenders. A hard cap at 10% could eliminate the business case for serving these customers entirely.

Mason's argument rests on several key points:

• Reduced lending to high-risk borrowers
• Potential elimination of certain credit products
• Unintended consequences for vulnerable consumers
• Broader negative economic impact

He stressed that while the intention to help consumers is valid, the mechanism could create more problems than it solves.

The deleterious impact Mason warned about extends beyond individual consumers. Credit cards serve as a critical financial tool for millions of Americans, particularly those who lack access to traditional banking services.

When asked multiple times by reporters about the proposal's potential effects, Mason consistently returned to the same theme: the cap would likely hurt those it intends to help. He noted that affordability remains a critical issue that requires attention, but the 10% cap isn't the right solution.

At the end of the day, I think an interest rate cap would restrict access to credit to those who need it the most, and frankly would have a deleterious impact on the economy.

The banking sector appears united in this concern. During JPMorgan's earnings call earlier in the week, that bank's CFO also warned that a cap could have a detrimental impact on lending operations and negatively affect consumers.

These coordinated warnings from two of America's largest banks suggest the financial industry views this proposal as a significant threat to current lending models.

Despite his firm opposition to the interest rate cap, Mason emphasized that Citigroup isn't dismissing the underlying problem. He explicitly stated the bank would work with the incoming Trump administration to address affordability concerns.

The bank's position reflects a nuanced approach: acknowledge the problem while opposing the proposed solution. This strategy allows Citi to maintain a seat at the table as policy discussions continue.

Mason carefully avoided speculating about specific impacts, noting that limited information is available about how such a cap would be implemented. This caution suggests the bank is still analyzing the proposal's details.

Key aspects of Citi's approach include:

• Engaging with policymakers constructively
• Proposing alternative solutions
• Emphasizing data-driven analysis
• Protecting consumer access to credit

The bank appears committed to being part of the conversation rather than simply opposing change.

The fourth-quarter earnings report provided the backdrop for these warnings. Citigroup, like other major banks, operates in a complex environment where interest rates, consumer behavior, and regulatory changes intersect.

The timing of Mason's comments is significant. With Trump's inauguration approaching, financial institutions are positioning themselves to influence policy decisions that could reshape their industry.

Credit card lending represents a substantial business for major banks. The ability to price risk appropriately across different customer segments is fundamental to maintaining a healthy credit portfolio.

The debate highlights a classic tension in financial policy: balancing consumer protection with market functionality. Mason's warning suggests the banking industry sees the 10% cap as tipping that balance too far.

As the new administration prepares to take office, this issue will likely remain a key point of discussion between Wall Street and Washington.

The 10% credit card cap proposal faces significant opposition from banking leaders who view it as economically harmful. Mason's warning represents the financial industry's opening argument in what could be a contentious policy debate.

Three critical points emerge from Citi's position:

• The cap would likely reduce credit access for vulnerable consumers
• Banking leaders support affordability solutions but oppose this specific mechanism
• Industry engagement with policymakers will continue as details emerge

As policy discussions evolve, the banking sector's unified stance suggests this debate is far from over. The challenge for the Trump administration will be finding solutions that address affordability without disrupting credit markets.

For consumers, the outcome could significantly affect their access to credit cards and other financial products in the years ahead.