Citi's top executives warned that President Donald Trump's proposed 10% cap on credit card interest rates could have dire consequences.
"An interest rate cap is not something that we would, or could, support, frankly," Chief Financial Officer Mark Mason said on a call with reporters ahead of the bank's fourth-quarter earnings call. "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."
Mason said multiple times that he did not want to speculate on the impact of the potential cap, given the limited available information. He said that Citi would work with the Trump administration to address the "important issue" of affordability.
Reporters asked Mason about the cap multiple times, and he repeatedly said it would likely not help customers most in need, as is Trump's stated intention. He said later in the call that, again, it would have a "very negative impact on the economy."
On the bank's earnings call, CEO Jane Fraser said that "a rate cap is not something that we can support" when asked about the news that Bilt Rewards is releasing three cards with interest rates capped at 10%, as reported by Bloomberg.
"To be clear, the impact to us and other banks would just be dwarfed by the severe impact on access to credit and on consumer spending across the country. These things just don't work out as intended," Fraser continued.
Much like Mason did on an earlier call, Fraser acknowledged the importance of affordability and said she's keen to collaborate with the administration.
In a post on Truth Social on Friday, Trump said he would call for a one-year cap of 10% on credit card interest rates. He argued that consumers are being "ripped off" by rates that he said can be as high as 20% or 30%. A cap would have to be approved by Congress, and similar proposals have previously stalled on Capitol Hill.
Other bank leaders, including JPMorgan's CFO, Jeremy Barnum, have warned that a 10% cap could reduce access to credit; however, others in the financial sector have applauded the plan.
Citi's profits fell 13% in the fourth quarter, to $2.47 billion, brought down partly by the sale of its operations in Russia, the bank said in an earnings report.
The bank saw an 84% surge in financial advisory fees in the fourth quarter. The investment banking unit has been reenergized under its new head, JPMorgan veteran Viswas Raghavan. Investment banking revenues increased by 38%, the bank said, and investment banking fees rose 35%.
Citi said that its "Transformation" — a years-long effort to modernize the bank and cut costs— is more than 80% complete, as stated in its earnings presentation. Fraser's attempted turnaround has included layoffs, new hires, and multibillion-dollar investments.
