The financial services industry is signaling a period of intense institutional friction as JPMorgan Chase, the nation’s largest lender by assets, suggests that the banking sector is prepared to exhaust all legal and strategic avenues to block a proposed federal mandate to cap credit card interest rates. In a high-stakes confrontation between the executive branch and the pillars of American finance, the rhetoric from the C-suite indicates that the industry views price controls not merely as a regulatory hurdle, but as a fundamental threat to the mechanics of risk-based pricing and the stability of consumer credit markets.
During a recent call with analysts and reporters following the release of the bank’s fourth-quarter earnings, JPMorgan Chase Chief Financial Officer Jeremy Barnum articulated a firm stance against the administration’s push for a 10% ceiling on credit card annual percentage rates (APRs). Responding to inquiries regarding the possibility of litigation, Barnum noted that if the industry faces directives to radically alter its business models without what it deems as sufficient justification or legal backing, "everything’s on the table." This sentiment underscores a growing consensus among major financial institutions that the proposed cap—intended as a populist measure to provide relief to debt-burdened households—could trigger a protracted legal battle over the limits of executive authority and the sanctity of private contracts.
The proposal, which emerged as a centerpiece of a broader economic agenda, seeks to impose a temporary one-year cap of 10% on all credit card interest rates. From the perspective of the administration, such a move is framed as a necessary intervention to curb "predatory" pricing at a time when many Americans are struggling with the cost of living. However, for the banking industry, the math of a 10% cap is fundamentally incompatible with the current economic environment. As of early 2026, the national average credit card APR stands at approximately 19.7%, according to data from Bankrate. For subprime borrowers or holders of store-specific retail cards, those rates can frequently exceed 25% or even 30%.
The disparity between the proposed 10% cap and the prevailing market rates represents more than just a loss of profit margin; it represents a potential collapse of the unsecured lending model. Credit cards are inherently risky for lenders because they are not backed by collateral like a home or a vehicle. To compensate for the high rate of defaults—which typically rise during economic downturns—banks utilize risk-based pricing, charging higher rates to those with lower credit scores. Industry analysts argue that if the government mandates a rate that is lower than the cost of capital and the expected loss rate combined, banks will have no choice but to cease lending to all but the most pristine "prime" borrowers.
Barnum’s warning that the policy would have the "exact opposite consequence" of its intended goal reflects a standard economic critique of price ceilings. In a market where the price of a service is artificially suppressed below the cost of providing it, the supply of that service inevitably shrinks. For the American consumer, this would manifest as a sudden and sharp contraction in credit availability. Millions of households that rely on credit cards for bridge financing between paychecks or for emergency expenses could find their accounts closed, their credit limits slashed, or their applications for new cards summarily rejected.
The broader economic implications of such a "credit crunch" are significant. Consumer spending accounts for approximately two-thirds of the United States’ Gross Domestic Product (GDP). Credit cards are a primary vehicle for that spending, facilitating hundreds of billions of dollars in monthly transactions. If the supply of credit is throttled, the resulting dip in consumer demand could act as a drag on economic growth, potentially tipping a fragile economy into recession. Furthermore, the retail sector, which often relies on co-branded credit cards to drive loyalty and high-ticket purchases, would likely face a direct hit to its bottom line.
The banking industry’s readiness to litigate is bolstered by its recent success in challenging federal regulations. Just last year, the financial sector successfully fought back against efforts by the Consumer Financial Protection Bureau (CFPB) to cap credit card late fees. That victory has provided a blueprint for how the industry might challenge a federal interest rate cap. Legal experts suggest that a 10% mandate could be challenged on several fronts, including the "Major Questions Doctrine," which the Supreme Court has recently used to strike down executive actions that lack clear congressional authorization for policies of vast economic and political significance.
Moreover, the banking sector is expected to argue that a federal cap encroaches upon existing state usury laws and established judicial precedents. Since the landmark 1978 Supreme Court case Marquette National Bank of Minneapolis v. First of Omaha Service Corp., nationally chartered banks have been allowed to charge the interest rates permitted in their home states, regardless of where the customer resides. A blanket federal cap would represent a tectonic shift in the regulatory landscape that has governed the industry for nearly half a century.
From a global perspective, the United States has traditionally maintained a more liberalized credit market compared to many European or Asian counterparts. In the European Union, while there is no single EU-wide cap, many member states have strict usury laws that limit interest rates. However, these markets also tend to have lower credit card penetration and more stringent lending requirements, resulting in a system where credit is less accessible to the lower-middle class than it is in the U.S. Analysts suggest that an American shift toward a 10% cap would move the U.S. model closer to these more restrictive systems, potentially ending the era of "democratized credit" that defined the late 20th and early 21st centuries.
Institutional investors are also closely monitoring the situation. Shares of major card issuers, including JPMorgan, American Express, and Capital One, have shown volatility in response to the news of the proposed cap. For shareholders, the concern is twofold: the immediate impact on interest income and the long-term uncertainty regarding the regulatory environment. Barnum’s comment that the bank "owes it to shareholders" to fight the cap highlights the fiduciary obligation to protect the institution’s profitability against what it views as arbitrary political interference.
As the administration moves forward with its enforcement path, the tension between the White House and Wall Street is likely to escalate. While the populist appeal of lower interest rates is undeniable in a political context, the economic reality of the banking business presents a formidable barrier. The coming months will likely see a flurry of lobbying efforts, public relations campaigns, and the filing of preliminary injunctions as the financial industry prepares for what could be the most significant legal battle over consumer finance in a generation.
The outcome of this struggle will determine more than just the APR on a plastic card; it will define the boundaries of government intervention in the private financial sector and the future of how risk is priced in the American economy. If the banks prevail, the status quo of risk-based pricing will be preserved, albeit under continued political scrutiny. If the administration succeeds, the U.S. credit market may undergo a fundamental transformation, resulting in a more controlled, but significantly more exclusive, lending environment. For now, the message from JPMorgan and its peers is clear: the industry is not prepared to retreat, and the legal machinery of Wall Street is being primed for a full-scale defense of its business model.
