EPS Trustee Sheila Bair discusses credit card rates in the Financial Times

“US banks need to cut their credit card rates”

By Sheila Bair (link to article)

Sheila Bair argues that US credit card interest rates are unjustifiably high and that banks could cut them substantially without restricting credit for most borrowers. She highlights the unlikely political convergence between Donald Trump and Senator Elizabeth Warren over a proposed 10 per cent cap on card rates, noting that banks have long maintained wide spreads over the Federal Funds Rate, even when the Federal Reserve pushed its benchmark near zero. Drawing on research showing that default risk does not explain today’s record‑high rates, Bair dismisses industry warnings that caps would cripple lending or push consumers toward payday loans. While she criticises Trump’s one‑year, flat 10 per cent ceiling as too blunt and potentially destabilising, she advocates a permanent cap set as a reasonable spread over the Fed’s rate, which would restore pre‑crisis norms, better align monetary policy with consumer outcomes, and prevent banks from continuing to capture the bulk of the benefits from low interest rates.