Affordability Policy Initiatives Could Trim U.S. Bank Earnings Over Time in World Economy News 23/02/2026 The Trump administration’s recent initiatives targeting affordability amid growing populism ahead of midterm elections have increased federal scrutiny of product offerings for consumers. While many of the proposed policies and bills pertaining to consumer finance and the mortgage industry have garnered bipartisan support, they face significant legislative hurdles, Fitch Ratings says. The administration’s proposals, including a 10% APR cap on credit cards, lower credit card interchange fees, housing initiatives such as 50-year and/or portable mortgages, capital gains tax exemptions for first-time home buyers, and tariff dividend payments would likely require congressional authorization. Laws enacted through legislation tend to be more permanent but are often more difficult to pass compared to executive orders (EO) or regulations that can be reversed by succeeding administrations. Irrespective of any legislative changes or EOs, credit card issuers will likely to be under pressure to address affordability issues for lower income consumers, which could affect product offerings and their structural profitability over time. Banks could proactively change product offerings or reduce APRs and/or fees which would result in lower earnings, unless otherwise mitigated. As banks have increasingly competed on rewards, the average credit card APR has risen to 21% as of 4Q25, with APRs, spreads and net credit margins continuing to rise despite modestly easing Fed Funds rates. Credit card net credit margins averaged 5.41% from 1994 to 2007, 7.64% from 2008 to 2021, and jumped to 12.35% from 2021 to 2025. Assuming stable credit losses, banks could reduce APRs by approximately 250 basis points to 18.5% by year end and still maintain net credit margins above pre-pandemic levels of around 11% versus 12.7% as of 4Q25, given our expectation for 50 bps of Fed Funds rate cuts to 3.25% by the end of the year. A blanket interest rate cap would be highly challenging for the industry, especially for issuers serving lower‑FICO customers. According to a March 2025 Federal Bank of New York report, credit cards generate ROAs of 6.8%, around 4x the banking sector ROA, with high FICO score ROAs at 5% and low FICO scores around 11%. Issuers that would see the most pressure on revenues, card issuance, and receivables growth would be those offering higher APRs, such as store or private-label branded cards. The ultimate effect of an APR cap on issuers would depend on the level of APR reduction and offsetting factors. Credit card issuers could potentially mitigate the impact of an interest rate cap with more basic card offerings that provide some combination of lower rates, less rewards, reduced marketing, higher annual fees and lower spending limits. Fitch Ratings-New York-18 February 2026: The Trump administration’s recent initiatives targeting affordability amid growing populism ahead of midterm elections have increased federal scrutiny of product offerings for consumers. While many of the proposed policies and bills pertaining to consumer finance and the mortgage industry have garnered bipartisan support, they face significant legislative hurdles, Fitch Ratings says. The administration’s proposals, including a 10% APR cap on credit cards, lower credit card interchange fees, housing initiatives such as 50-year and/or portable mortgages, capital gains tax exemptions for