Matt Frankel

As you said, Goldman and Morgan are lifting the sector today, but the initial reaction to all the big bank earnings was negative.

There wasn't much to dislike in their earnings reports, although some banks missed estimates on investment banking fees, some missed estimates on fixed income trading.

But these stocks have been excellent performers over the past year.

Just to name a couple, Wells Fargo is up 65% in 2025 alone.

Goldman Sachs gained 50% last year.

So, a pullback on what I would call strong but not stellar earnings isn't that big of a surprise.

Yeah, I think everybody agrees that there's a credit card problem in the United States.

It's definitely a problem that we have way too much credit card debt, we're paying too much in interest every year.

I don't think a 10% credit card rate cap is practical, nor do I think it's the best solution to the problem.

And it certainly is a problem.

The unintended consequence would be that credit card companies would essentially be forced to drop consumers that represent a relatively high credit risk, and not just the bottom customers.

I'm talking about anyone without stellar credit.

Think of it this way.

If a bank is forced to cap credit card interest rates at 10%,

and their cost of deposits is 3% for savings accounts, that's a 7% gross margin.

Consider that many credit card companies, like Capital One, for example, have a 6% to 7% charge-off rate.

That would eliminate that profit entirely.

That's before you even factor in the cost of providing credit card rewards that everyone signs up for these things for, and the general cost of running the business, having branches, having offices, things like that.

Credit cards would be completely unprofitable.

The only way to make that work would be to get rid of all the top-tier credit customers, who ironically are the least in need of access to credit.