Jamie Dimon, Anthony Noto, and Other Leaders Respond to Trump’s Credit Card Cap Proposal

Jane Fraser, the CEO of Citigroup, doesn’t think the proposal has a shot of passing Congress. At Davos on Tuesday, she made the case why, and what damage she thinks it could do if it were adopted.

“This would not be good for the economy were this to happen,” she said during a CNBC interview at the World Economic Forum. Fraser invoked a history lesson, referencing a failed 1980 effort by then-President Jimmy Carter to restrict the expansion of consumer credit to fight inflation. The program triggered a sharp economic contraction and was dismantled just months after it went into effect.

The “irony,” she said, is that a cap would only make credit harder for Americans to obtain, triggering “worrying” effects in sectors from dining to airline travel. “Caps do the opposite of what you think they would, and what they intend to do. They really restrict access to credit,” she said, “and no one wants a a situation where only the rich have access to credit cards.”

Asked whether lawmakers had given her any indication that Trump’s proposal could had bipartisan backing to be ratified, she had a definitive answer: “No.”

Ahead of the bank’s fourth-quarter earnings call last week, Mark Mason — one of Fraser’s top deputies and Citi’s outgoing chief financial officer — told reporters during a media briefing that the proposed cap would have a “very negative impact on the economy.”

“An interest rate cap is not something that we would, or could, support, frankly,” he said, echoing Fraser’s concerns. “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.”