In a May 27 Virtual Hearing of the US House Financial Services Committee, Bank CEOs Jamie Dimon (JPMorgan Chase) and Jane Fraser (Citigroup) expressed doubts about a blanket 36 percent APR cap, currently under discussion in Washington DC.
Answering questions from Rep. William Timmons (R-SC), about whether banks could offer a short-term, small dollar loan at 36 percent APR, Dimon said:
“It costs money to produce a loan, underwrite it, and if that cost goes to APR and is included in 36 percent, it’s impossible to do loans like that and make a profit.”
Referring to his declared lack of opposition to a 36% APR bill in congress, he continued:
“That’s precisely why we don’t do it… it doesn’t affect us, so I am not going to fight that bill.”
Turning to Citigroup CEO Jane Fraser, Rep. Timmons spoke of Ms. Fraser’s previously declared concerns about unintended consequences of a 36% APR cap and asked if small-dollar loans would still be possible under such a cap. Fraser said:
“I worry about the imposition of flat caps, they often have unintended consequences. I have seen this in many other countries, where they deny access, they have limitations on access to credit and actually end up almost hurting the customers they are trying to help, more than they aid them.”
NILA notes these concerns mirror our own.
The entire Committee Hearing can be viewed below, with the relevant section running from 4.02.27 through 4.05.27.
SOURCE: House Financial Services Committee