Trump's promise to cut government may collide with his pledge to reduce interest rates
In Washington, there's an air of anticipationas the Trump Administration starts to take shape. Consumer issues didn't get much attention during the recent campaign but there's a lot of discussion now around issues like consumer protection, bank regulation, Social Security changes and other bread-and-butter topics.
Republicans are upbeat about their economic plans, which include cutting taxes, loosening regulations on banks and Wall Street and rolling back some safety and environmental rules that business leaders seeas impeding growth.
While disappointed Democrats grouse about leaving the country or at least lying low for the next four years, many Republicans are upbeat about aTrump economy, which they think will spur consumers to spend more and thus contribute to economic growth.
That brings up the question of what to do with theConsumer Financial Protection Bureau. It'slittle-known outside financial circles but it has been an aggressive force in regulating credit cards and financial services of nearly every description and is widely hated by Republican business leaders.
Billionaire Elon Musk has suggested getting rid of the agency entirely, saying there are too many regulatory agencies, according to a recent Wall Street Journal article. Musk co-chairs the Department of Government Efficiency, an outside group that is advising Trump on the transition.
A modest suggestion about the CFPB
Senator Elizabeth Warren (D-Mass.), who founded the CFPB during the Obama Administration, might have a suggestion for the Trump team.
She recently highlighted how the CFPBhas worked to bring down credit card prices and couldhelp fulfillTrumps promise to cap credit card interest rates at 10%.
According to the Federal Reserve, Americans are carrying a record $1.17 trillion in credit card debt, Warren noted at a hearing of the Senate Committee on Banking, Housing, and Urban Affairs.
"President Trump spoke to the concerns of millions when he said he would put a 10% cap on credit card interest rates," Warren said at the hearing. "That is the kind of big structural change that will make a big difference to families across America.
"Over the last decade, giant credit card companies have jacked up interest rates to historic levels. Average interest rates have nearly doubled from 13% back in 2013, to 23% in 2024, now the highest on record."
Since the Federal Reserve started tracking credit card interest rates in 1994, credit card companies have steadily increased interest rates to record highs. Even as the Federal Reserve has cut rates, credit card interest rates have remained higher than ever, with average interest rates nearly doubling over the last decade, Warren said.
She said the CFPB could be a "strong partner" with Trump in holding down interest rates paid by consumers.
During the hearing, CFPB Director Rohit Chopra highlighted the CFPBs accomplishments in helping Americans struggling under the weight of credit card debt, like limiting late fees charged by credit card companies and cracking down on bad actors in the credit card market.
Chopra said that currently, Americans are paying an extra $25 billion a year in interest rates, compared to 10 years ago. Chopra sasid that the CFPB would partner with President-elect Trump to enforce his plan to cap interest rates at 10% if that plan was enacted.
Photo Credit: Consumer Affairs News Department Images
Posted: 2024-12-16 21:21:41
