Leading financiers on Wall Street, during the prospect of Trump 2.0, generally treaded lightly around political topics, and specifically around President Donald Trump. The prevailing sentiment dictated a strategy of nodding, smiling, staying in one’s lane, and avoiding becoming a target.
However, when Trump’s “affordability” proposal emerged earlier this month and targeted a core revenue stream for banks, the mood shifted dramatically. Publicly and forcefully, Wall Street executives signaled a firm “no” to Trump.
This defiance is not being well-received.
On Thursday, the President, known for his litigious nature, filed a lawsuit against JPMorgan Chase and its CEO, Jamie Dimon, alleging the bank wrongfully “de-banked” Trump following the January 6, 2021, attack on the U.S. Capitol. Trump is seeking $5 billion in damages.
Previously, Trump had hinted at this lawsuit, which was likely in preparation for several months. Yet, perhaps coincidentally, the filing in a Florida court occurred the day after Dimon told an assembly of influential figures at the World Economic Forum in Davos, Switzerland, that Trump’s plan to effectively halve credit card interest rates would be an “economic disaster.”
The White House directed inquiries on the matter to Trump’s external counsel, Alejandro Brito. His law firm did not immediately respond to a request for comment.
Dimon’s public rebuke shattered what had become an unspoken, often precarious, accord among corporate America’s leaders: do not provoke Trump, even when his policies directly impact the bottom line.
When Trump imposed broad global tariffs last spring, threatening corporate profits, executives remained silent. The same silence held when Trump commenced his assault on the Federal Reserve—an institution whose independence is crucial for a stable business environment. Even as he began openly targeting private entities, claiming a portion of revenue from companies like Nvidia and Intel, no one spoke out.
Corporate America, frankly, is expressing significant apprehension. Since the start of his hypothetical second term a year ago, Trump and his administration have initiated investigations, legal actions, or charges against various perceived adversaries, including media outlets such as CBS, the New York Times, and the Wall Street Journal. Last year, he threatened imposing massive tariffs on Apple over an alleged slight from CEO Tim Cook, and Trump stated he would block Exxon’s venture in Venezuela because he disliked CEO Darren Woods’ lack of enthusiasm during a meeting of oil executives earlier this month.
The day following Dimon’s comments in Davos, Trump initiated the Florida lawsuit over JPMorgan’s decision to terminate his client status subsequent to the January 6, 2021, Capitol breach.
The day following Dimon’s comments in Davos, Trump initiated the Florida lawsuit over JPMorgan’s decision to terminate his client status subsequent to the January 6, 2021, Capitol breach. Fabrice Coffrini/AFP/Getty Images
Privately, some trade organizations were developing strategies to actively challenge the Trump administration to safeguard their commercial interests, CNN reported at the time, citing individuals familiar with the situation. However, these plans were shelved as members worried about incurring the White House’s wrath.
And CEOs universally are “very concerned” about the administration’s attack on the Fed’s independence, according to Jeffrey Sonnenfeld, founder of the Yale Chief Executive Leadership Institute. Sonnenfeld and his research team found that 80% of the CEOs they surveyed believe Trump is not acting in America’s best interest by pressuring Federal Reserve Chair Jerome Powell to lower interest rates. (It is noteworthy that this poll was conducted before the Justice Department’s criminal inquiry targeting the bank and Powell commenced.)
The Red Line
But for Wall Street, the President appeared to have finally crossed a clear boundary with his proposed cap of 10% on credit card rates. In a post on Truth Social on January 9th, the President, attempting to convince voters that Republicans care about the cost-of-living crisis, asserted that the public would no longer be “ripped off” by credit companies charging an average of 20% APR on card purchases.
Although such a cap would likely need to originate from Congress, this statement sent shockwaves through Wall Street, eliciting rare public criticisms from executives.
“A rate cap is not something we can support,” stated Jane Fraser, CEO of Citigroup, during her bank’s earnings call.
Bank of America CEO Brian Moynihan—well accustomed to facing public criticism from Trump—stated last week that a cap would not have the effect Trump intends: “If you lower the limits, you narrow credit access, meaning fewer people receive credit cards, and the balances on those cards will also be constrained.”
But Dimon’s “economic disaster” remark in Davos constituted a more direct critique, originating from the foremost figure on Wall Street and an individual who has a complicated personal history with Trump.
Trump Versus Dimon
Trump and Dimon have maintained a tense relationship for years.
In 2018, in a comment Dimon almost immediately walked back, the Wall Street titan stated on a panel at the bank’s headquarters that he “could beat Trump” in a head-to-head presidential contest “because I’m as tough as he is, I’m smarter than he is.”
Trump countered online, labeling Dimon a “poor student and nervous wreck.”
Dimon’s approach toward the President in this potential second term has been far more calibrated. In the Davos interview, Dimon mentioned disagreeing with some of Trump’s policies and agreeing with others, but largely sidestepped the question of why he and other CEOs were so hesitant to challenge the President.
Perhaps he understood the stakes. Following a brief JPMorgan earnings statement expressing disagreement with Trump’s credit card rate plan (“it would be dramatic for subprime pricing”) and his criminal investigation against Powell (“a bad idea”), Trump publicly slammed Dimon.
“Jamie Dimon probably wants higher rates,” Trump stated on January 15th. “Maybe that’s how he makes more money.”
Two days later, after the Wall Street Journal reported that Trump had previously offered the Fed Chair position to Dimon, Trump announced he intended to sue.
“No such offer was ever made, and, in fact, I will be suing JPMorgan Chase within two weeks for the improper and wrongful TAKING of me as a client after the Jan. 6 protest,” Trump declared on Truth Social.
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