Why Banks May Not Be Rate-Cap Losers

President Trump has again pushed the idea of capping credit-card interest rates.

On its face, a 10% ceiling looks like a direct hit to card lenders, especially with average assessed rates sitting near 22%, according to Federal Reserve data.

That threat has already weighed on bank stocks.

Shares of major issuers like American Express $AXP ( ▲ 0.14% ), Capital One Financial $COF ( ▼ 0.01% ), Citigroup $C ( ▲ 0.88% ), JPMorgan Chase $JPM ( ▼ 0.09% ), and Synchrony Financial $SYF ( ▼ 1.61% ) are down this year, even as the broader KBW Nasdaq Bank Index $BKX ( 0.0% ) has outperformed the S&P 500. Investors are pricing in uncertainty.

But history under Trump offers a different lens.

Last year, pharmaceutical stocks sagged under threats of price controls and tariffs. Drugmakers ultimately struck voluntary pricing and investment deals that proved manageable, while avoiding harsher regulation. By year’s end, the pharma index had beaten the market.

A similar path may exist for banks.

While Washington holds real regulatory power over lenders, Trump’s latest comments suggest legislative hurdles ahead. Congress has struggled for years to pass sweeping changes to card economics, including merchant fees and overdraft limits.

Advisers have floated compromises, such as voluntary lower-rate “Trump cards” aimed at underserved borrowers. Meanwhile, banks already offer lower-rate cards with fewer rewards, preserving swipe-fee economics.

For investors, the lesson from pharma and autos is patience. TACO Trade or no, political threats can end in negotiated outcomes that look far less damaging than feared.