While the cold shift in the Trump administration’s tone on banking regulation in recent weeks is noteworthy – specifically the President’s endorsement of controversial credit card interest rate cap and card network competition measures that pose risks to various bank revenue streams – the administration’s regulatory track record actually suggests a warm embrace of bank-friendly moves. Treasury Secretary Bessent acknowledged as much this past week in Davos when he stated “through my position on [the] Financial Stability Oversight Council, and the three bank regulators, the Federal Reserve, the [Office of the Comptroller of the Currency (OCC)], and the [Federal Deposit Insurance Corporation (FDIC)], we have done a lot to deregulate banks [and] earnings are way up.”
Planned and finalized deregulatory changes from the prudential regulators over the first year-plus of the Trump administration include (i) reducing the leverage ratio for large banks, (ii) greatly limiting the frequency and depth of bank examinations, including narrower consideration of reputational risk, (iii) friendly adjustments to merger processes to support M&A activity, (iv) favorable shifts in various thresholds that diminish the scope of application of certain rules, and (v) bank-friendly planned revisions to the previous Basel III Endgame proposal.
Changes at the Consumer Financial Protection Bureau (CFPB) are even more illustrative of the Trump administration’s friendly posture toward banks in practice, if not in the President’s recent Truth Social posts. Indeed, the administration has been intent on putting what many in the banking and financial services industry described as a rabid watchdog (in the Biden era) to sleep. Dropping more than twenty enforcement actions initiated by former Director Rohit Chopra, pulling back on the credit card late fees rule (in the context of an uphill legal battle), working with Congress to rescind the overdraft fees rule, and cutting the agency’s funding functionally in half – not to mention efforts to trim headcount by approximately 90% and refusal to request funding as well as the broadly deregulatory agenda of the beleaguered agency – all speak to Trump as a very close friend rather than a foe of the banking industry.
But even as Trump’s regulators continue to make good on their deregulatory commitments, the President has begun lobbing unwelcome grenades at the banking industry. Specifically, he has proposed a punitive 10% cap on credit card interest rates and endorsed the controversial Credit Card Competition Act, amid a host of other “affordability”-focused reforms.
Capstone strongly (and perhaps cynically) believes that this tonal shift should not be interpreted as any newfound commitment to significantly tighter regulation of banks, but rather as an effort to take the issue away from Democrats, who are actively tapping into a politics of “pure economic rage,” as James Carville put it recently. Even if the President’s personal commitment to affordability policies is sincere, and not a leftward pivot in the context of fast-approaching midterm elections and the President’s reported concern about the implications of losing the majority in the House of Representatives (hint: political oxygen-consuming impeachment proceedings), his ability to actually enact any of these policy proposals is contingent on support from congressional Republicans.
And his own party is unlikely to play ball. Senate Majority Leader Thune has already thrown cold water on the credit card interest rate cap proposal, while leaving the door cracked for a vote on the Credit Card Competition Act. Similarly, Speaker Johnson described President Trump as “an ideas guy” when he likewise signaled limited appetite for the interest rate cap, which has been dragged through the mud over its credit access implications.
To signal the depth of the performance, we had a favored economic advisor of the President, Kevin Hassett, discuss the idea of “Trump cards” that had promotional features consistent with the President’s proposal, but less favorable than many zero percent APR offerings already available on the market. Certain bank issuers have run with the idea, perhaps a way to give the Trump administration a shadow win with functionally no actual impact on credit card costs for consumers or bank practices.
So, while President Trump may continue to say one thing about bank-related affordability measures, his chosen regulators and party members in Congress will continue to do another. Congress remains highly unlikely to pass either of the credit card measures that the President has endorsed. Both measures remain divisive within the Republican Party (and there is also healthy skepticism over a 10% rate cap among Democrats). Leadership at the Fed, the OCC, and the FDIC tasked with rulemaking, supervision, and enforcement, all have a years-long track record demonstrating a sincere commitment to reducing bank regulatory burdens. And whether the CFPB even continues to exist remains an open question as an en banc rehearing in existential litigation over the agency’s fate approaches next month. While we certainly expect the President to keep talking, Congress and his banking regulators are highly unlikely to shift the way they walk.
Read more from our financial services team:
The Deregulatory Pendulum Swing: Life after a Neutered Consumer Financial Protection Bureau
Continued Pressure: Why the Insurance Industry Will Continue to Face Scrutiny
Banking on Ease: How the Regulatory Burden on Banks Will Lessen in 2026
