Klarna CEO Sebastian Siemiatkowski expressed support for President Donald Trump’s push to cap credit card interest rates at 10% during an interview with “The Claman Countdown” Monday, despite opposition from much of the banking industry.
“Revolving credit card interest is nothing but an extraction machine,” Siemiatkowski said. “I think that President Trump is super wise and willing to take on the banks on behalf of the U.S. consumers.”
President Trump has called for a 10% cap on credit card interest rates. Tuesday marks the deadline for credit card companies to respond to the proposal.
THIS BLACK FRIDAY, DON’T LET ‘SWIPEFLATION’ SWIPE $1,400 OF YOUR HOLIDAY CASH
FOX Business host Liz Claman noted that a federal cap like this would likely require Congress to pass legislation for it to be legally enforced.
But the Klarna CEO argued that American consumers are increasingly fed up with the industry’s “unfair” practices.
“They are tired of these tricks that the credit cards have been pulling on them, and they are looking for healthier alternatives,” Siemiatkowski said.
He argued the credit industry’s “broken system” has resulted in overbearing costs for American consumers.
“$160 billion in interest charges last year, 31 billion Americans pay in these fees. That isn’t a financial service industry. It is an extraction machine. So, it is not necessary to charge so high interest rates,” he said.
ELIZABETH WARREN SAYS TRUMP CALLED HER AFTER SPEECH CRITICIZING HIS RECORD ON COSTS
Siemiatkowski’s stance is at odds with most major credit card issuers, which argue that interest rate caps would restrict access to credit, particularly for lower-income borrowers.
Many of them predict a cap like this would clip credit for those consumers. However, Siemiatkowski said the warnings are not supported by what has happened with rate caps overseas.
“In some European markets, there are interest rate caps,” he explained. “It has not led to these consequences that the banks are now trying to scaremonger with.”
The CEO also argued that high credit card fees raise prices for customers, even those who don’t use credit cards.
“Because merchant fees and credit card fees are so high, grocers and retailers have to charge higher fees on average, even for people paying cash,” Siemiatkowski said.
“That is not a great system for society. And it’s an unfair system,” he added.
Siemiatkowski argued that the tighter rules Trump is proposing could restore balance in the credit industry.
“Reining things in with requirements like this can be healthy for an industry that’s lost its direction,” he said.
Read the full article here
