Trump's 10% Interest Rate Cap On Credit Cards Will 'Likely Bring On A Recession,' Says Capital One CEO: $6 Trillion Consumer Spending At Stake

Core Viewpoint - Capital One Financial Corp. CEO Richard Fairbank warns that President Trump's proposed 10% cap on credit card interest rates could severely limit consumer access to credit and destabilize the economy [1][2]. Group 1: Impact of Interest Rate Caps - Fairbank argues that implementing price controls on credit will not make it more affordable but will reduce its availability across the credit spectrum [2]. - He emphasizes that banks would be forced to cut credit lines, restrict accounts, and limit new credit originations to a small subset of consumers [2]. - A significant contraction in available credit could lead to economic shocks and potentially trigger a recession due to reduced consumer spending [3]. Group 2: Role of Consumer Credit in the Economy - Consumer credit is crucial to the U.S. economy, with 70% of GDP driven by consumer spending, and $6 trillion of that spending occurring on credit cards [3]. - Fairbank highlights that credit cards serve as an essential entry point for many consumers to build credit history, with some relying on them as their only access to credit [3]. Group 3: Capital One's Vulnerability - Analysts indicate that Capital One is particularly vulnerable to interest rate caps due to its heavy reliance on revolving credit card balances and net interest income [4]. - The company reported $279.6 billion in credit card loans, which constitutes the largest share of its total loan portfolio of $453.6 billion [4]. Group 4: Industry Consensus - Fairbank's concerns align with warnings from other economists and industry experts regarding the potential negative effects of interest rate caps on credit cards [5].