Originally published on Substack. 

​President Trump wants to cap credit card interest rates at 10% compared with the 20%+ most cards charge today. The justification is familiar: credit card rates are high, many households feel squeezed, and the government should step in to protect consumers.

That argument sounds appealing. But it rests on a fundamental misunderstanding of how credit markets work. Fortunately, Republicans in Congress are pushing back on this bad idea but ignore the damage already being done by another price-control proposal moving through Congress: the Credit Card Competition Act.

Together, these ideas reflect the same error: treating prices we don’t like as proof that markets are failing. They aren’t.

Credit Is a Price for Risk and Time​

Credit is not free money. It is an agreement across time. A lender provides money today and gets repaid later, if all goes well.

Interest rates exist to manage that uncertainty. They reflect risk, the time value of money, inflation, and opportunity cost. Lending money today means it cannot be used elsewhere tomorrow.

Interest rates are not moral judgments. They are prices.

Capping interest rates does not eliminate risk. It prevents risk from being priced. When prices are forced below what risk requires, lenders respond the same way suppliers always do: they reduce supply.

That reduction hits marginal borrowers first.

Who Uses Credit—and Who Loses It When Prices Are Controlled

According to Federal Reserve survey data, more than 80 percent of U.S. households have at least one credit card, and most cardholders prefer using credit cards for everyday purchases. That access exists because lenders are allowed to price risk. But access is not equal.

Lower-income households are less likely to have credit cards. When they do, they are more likely to carry balances, especially during emergencies. These households rely on flexible credit the most—and they are the first to lose access when lending standards tighten.

A rate cap doesn’t protect them. It prices them out.

Big Debt Numbers Don’t Mean the Market Is Broken
​
Supporters of price controls often point to debt totals. According to the Federal Reserve Bank of New York, total household debt is about $18.6 trillion, including roughly $1.2 trillion in credit card balances, which make up about 20 percent of all non-housing debt.

Debt size alone doesn’t indicate failure. Repayment does.
​
About 12.4 percent of credit card balances are 90 or more days delinquent—elevated compared with recent years and near levels seen during the Great Financial Crisis.

Here’s the key point: there were no federal interest-rate caps during the financial crisis or the pandemic, and the credit card market did not collapse. Losses rose, lending tightened temporarily, and repayment normalized.

There is no new emergency today that suddenly justifies government price setting.

The Math Behind Credit Cards

Credit cards are expensive to operate. As outlined by the Committee to Unleash Prosperity, lenders face roughly:

• 4 percent in funding costs
• 6 percent in expected credit losses
• 5 percent in administration, fraud prevention, and collections

That’s more than 15 percent in costs before earning any return.

A 10 percent cap guarantees losses for many borrowers.
​
When losses are guaranteed, lenders respond logically. They tighten approval standards. They lower limits. They close accounts with weaker credit histories. Credit becomes concentrated among the safest borrowers.

That isn’t punishment. It’s arithmetic.

The Credit Card Competition Act Repeats the Same Mistake

Interest-rate caps aren’t the only price controls on the table. Congress is also considering the Credit Card Competition Act, which would force banks to route transactions over government-preferred payment networks.

Supporters claim this would lower costs. In reality, it suppresses another price in the credit system.

As explained in a coalition letter led by Americans for Tax Reform, payment-network revenue funds:

• Fraud prevention and cybersecurity
• Network reliability and innovation
• Rewards programs like cash-back and travel points

When that revenue is reduced, those benefits don’t disappear evenly.

Rewards are cut first for everyday cardholders and small businesses. High-balance, premium users are protected the longest. Once again, costs don’t vanish—they get shifted.

The Credit Card Competition Act and interest-rate caps are two versions of the same policy instinct: control prices first, deal with consequences later.

Who Decides?

Both proposals rest on the idea that consumers make poor choices and need protection from themselves. That assumes policymakers can judge the tradeoffs facing millions of households better than individuals can.

Economic decisions are subjective. What looks irresponsible from the outside may be rational given income volatility, medical bills, or short-term shocks. We cannot observe the alternatives people reject.

Replacing individual judgment with political judgment isn’t economics.

It’s paternalism.

Closing Thoughts

Price controls don’t work. They don’t work for housing, labor, energy, or credit.

Capping interest rates and regulating payment networks won’t make credit cheaper for everyone. They will make it scarcer, reduce benefits, and limit options—especially for the people who rely on credit the most.

The price of credit is still a price. Suppress it, and the consequences follow.

Good intentions don’t change bad economics.

Originally posted on Inside Source's DC Journal. 

If we want to protect consumer privacy, strengthen innovation and restore competitive markets, then the path forward is clear: repeal the Consumer Financial Protection Bureau’s Section 1033 rule — and shut down the CFPB.

For too long, the CFPB has served not as a neutral regulator but as a tool for centralizing power in Washington and forcing private actors into government-designed frameworks. Its most recent attempt, the Section 1033 “open banking” rule, is a case study in bureaucratic overreach.

Congress included Section 1033 in the Dodd-Frank Act to ensure that consumers could access their financial data. It was never intended to mandate how that data must flow across the financial system or to give third-party firms free access to private infrastructure.

In 2024, the CFPB finalized the Section 1033 rule that did just that. It required banks and credit unions to hand over consumer data to third-party apps and aggregators — without compensation, without clear liability standards and without meaningful accountability.

The rule also mandated the development of costly application programming interfaces (APIs) systems while prohibiting firms from charging fees to recover those costs. That’s not consumer empowerment. It’s regulatory coercion.

This rule is economically flawed, legally unsound and strategically dangerous. It turns a competitive, contract-driven market into one governed by federal mandates and price controls. That should concern anyone who believes in economic freedom.

It gets worse. The CFPB’s rule imposed one-sided liability, holding banks responsible for consumer data even after it leaves their systems, while allowing aggregators to operate under minimal regulatory scrutiny. This distortion undermines trust, weakens cybersecurity, and makes consumers more, not less, vulnerable.

Thankfully, a federal court froze the rule, citing concerns about statutory overreach, arbitrary compliance deadlines and inadequate consideration of the risks. The Supreme Court’s ruling in Loper Bright v. Raimondo only reinforces the judgment: agencies like the CFPB cannot interpret vague statutes to justify sweeping power grabs. The text of Section 1033 does not authorize the kind of regime the CFPB attempted to impose.

Meanwhile, the real market is working. Today, more than 200 million accounts are linked through private, voluntary agreements between financial institutions and fintech companies. Standardized APIs developed by the Financial Data Exchange serve tens of millions more. Secure data-sharing has improved, screen scraping is declining, and consumers have more tools than ever to manage their finances — all without federal intervention.

As the Southwest Public Policy Institute shows in its latest analysis, the U.S. financial data ecosystem has evolved organically, and in many ways, more successfully than the top-down, government-imposed models seen in other countries. That ecosystem works because it is based on property rights, private contracts and market pricing. The CFPB’s rule would override all three.

This brings us to the larger point. The problem isn’t just Section 1033 — it’s the CFPB itself.

Created by the Dodd-Frank Act, the CFPB was designed to be independent of congressional appropriations and has operated with little accountability. Over time, it has used this freedom to stretch its mandate, pick winners and losers in the marketplace, and substitute administrative fiat for real-world economics. Its rules have discouraged investment, raised compliance costs, and made financial products more expensive for working families.

When I served at the White House Office of Management and Budget, I worked under the Russ Vought, who now leads the CFPB. He has already requested no new funding for the bureau — a smart move. Reviving the agency through a new Section 1033 rule would only invite the next administration to expand its powers again.

The CFPB is not needed to protect consumers. We already have strong laws on fraud, privacy and financial transparency. What we don’t need is a Washington-based regulator trying to engineer outcomes that the market has already solved more efficiently.

If we believe in consumer choice, innovation and limited government, then we should do two things: repeal the Section 1033 rule and wind down the CFPB once and for all.
​
We don’t need regulators telling consumers how to bank. We need to let consumers decide which services meet their needs — and let firms compete to provide them. That’s how real innovation happens. That’s how markets thrive. And that’s how we protect the freedom to prosper.

Originally published at American Banker. 

Americans have more tools than ever before to save, borrow, invest and build their financial futures. That's a good thing, driven by investments from both banks and technology companies of all sizes that have identified market gaps and responded.

Read the full post on American Banker. 

Originally published at The Daily Economy. 

​Washington never misses a chance to promise “fairness” while tightening its grip on the financial system. For more than a decade, regulators and central bankers have stretched their authority far beyond the original intent of the law, distorting markets, punishing savers, and concentrating economic power in the hands of bureaucrats. 

The latest example is the Consumer Financial Protection Bureau’s Section 1033 rule, which marks a new front in Washington’s quiet campaign to nationalize financial data under the guise of “consumer empowerment.”

Section 1033 was intended to help consumers access their financial information. In practice, the Biden-era CFPB twisted it into a sweeping mandate that forces banks, credit unions, and fintech companies to share customer data with third parties, regardless of cost, security, or consent. Regulators call this “data portability.” But it’s really data coercion, forced transfer of private information directed by the government. 

By compelling institutions to open their systems to outside actors, the CFPB is creating massive cybersecurity risks and legal uncertainty. Once that data leaves a secure bank environment, who’s responsible if it’s hacked or sold? The agency doesn’t say, because it doesn’t have to. It operates as a mostly unaccountable branch of government funded by the Federal Reserve.

This new rule fits a pattern that stretches across administrations of both parties. 

The Federal Reserve has spent years manipulating the economy through its own version of central planning. Its balance sheet exploded from about $4 trillion before the COVID lockdowns to nearly $9 trillion at the peak, and even after years of “tightening,” it still sits around $6.6 trillion, roughly 20 percent of US GDP. That extraordinary expansion, coupled with record federal deficits, monetized Washington’s overspending and triggered the inflation surge Americans are still feeling today. 

The Fed’s interventions distorted credit markets, inflated asset prices, and fueled the illusion that easy money could substitute for productivity. The result has been slower growth, declining real wages, and a public that no longer trusts the dollar — or the institutions that manage it.

At the same time, agencies such as the Federal Deposit Insurance Corporation have extended open-ended guarantees to ever-larger deposits up to $250,000, signaling to financial institutions that risk doesn’t really matter because taxpayers will always clean up the mess. The more Washington insulates these institutions from market discipline, the more reckless behavior it encourages. That’s not consumer protection; that’s moral hazard on a national scale.

The CFPB’s Section 1033 rule compounds that problem by politicizing access to financial data. It hands Washington the ability to dictate not only how money moves but also how information about money moves. 

Once regulators can decide which companies may access data and on what terms, they effectively control the competitive landscape of American finance. This is industrial policy in digital disguise. And it’s already spilling into state politics, where legislators are introducing new caps on credit card interest rates, limits on interchange fees, and other well-intentioned but destructive interventions. Each of these measures increases costs for consumers, reduces credit access for the poor, and consolidates power among the largest incumbents who can afford the compliance burden. If this sounds like central planning, that’s because it is. 

A handful of bureaucrats now wield more influence over the financial system than the millions of Americans who depend on it. The Fed’s technocrats decide the cost of money. The CFPB dictates how data may flow. The FDIC guarantees risks that private firms should bear. And Congress keeps spending as if none of it matters, driving the national debt above $37 trillion and pushing annual interest payments past $1.1 trillion — a sum larger than the defense budget. These are not isolated mistakes. They are symptoms of a government that has grown far beyond its competence.

The path forward begins with humility and a return to first principles. The Fed should stop acting as an unelected economic czar and start shrinking its balance sheet toward historical norms, or possibly back to six percent of GDP, where it was before the Great Financial Crisis. Congress should reassert its oversight role and restore a rules-based monetary framework that ties money growth to economic fundamentals, not political convenience. The CFPB should be dismantled or at least stripped of its unilateral authority, with legitimate fraud enforcement consolidated under accountable agencies. Most importantly, Washington must end its obsession with managing markets and start trusting them again.

America’s prosperity was built on sound money, competition, and personal responsibility — not on bureaucratic control. If we want a financial system that works for everyone, we must end the centralization of both money and data. Section 1033 isn’t just another bad rule; it’s a warning sign of how far we’ve drifted from a truly free economy. The stakes are simple: either Americans control their financial future, or Washington does. It’s time to choose the former.

Originally published at The Washington Examiner.

The Consumer Financial Protection Bureau, the bureaucratic brainchild of Sen. Elizabeth Warren (D-MA), has become a textbook example of how government overreach hides behind feel-good slogans. Now, its supporters are trying to use religious freedom as cover for one of its worst ideas yet: Section 1033, the so-called “open banking” rule.

Let’s be clear: Section 1033 isn’t about consumer empowerment. It’s about expanding federal control over America’s financial system by forcing banks and credit unions to hand over access to their infrastructure to third-party financial technology firms — at no charge.

That’s not innovation. That’s theft.

Alliance Defending Freedom founder Alan Sears recently argued that the rule is necessary to help faith-based groups and nonprofit organizations denied service by major banks. He’s not wrong that religious and conservative organizations have been victims of debanking.

But here’s the real story: These weren’t just corporate decisions. They were done under pressure from the Biden administration, which spent years coercing banks to drop politically disfavored clients. Through environmental, social, and governance mandates, regulatory intimidation, and informal guidance, Washington weaponized the financial system against those with whom it disagreed. The problem wasn’t market failure; it was government pressure.

So why are we now being told the solution is to give the government even more control?

Finalized under former President Joe Biden’s CFPB and now under review by the Trump administration, Section 1033 compels banks to give fintechs access to consumer financial data — without compensation. In 2022 alone, banks spent over $200 billion on digital infrastructure and cybersecurity. These aren’t spreadsheets; they’re secure networks, fraud monitoring systems, and customer platforms built to protect users and maintain trust.

​Section 1033 treats all that like a public utility — mandating free access for any third-party app or data aggregator that a consumer approves. No negotiation. No security guarantees. Just a federal edict.

This is a price control, and like all price controls, it will backfire. When the government mandates free access, banks have fewer incentives to invest in cybersecurity or innovate. Fintechs, meanwhile, are encouraged to ride for free rather than compete or create. Over time, this means less innovation, more risk, and fewer real choices for consumers.

Some claim the rule is needed to prevent discrimination. But we already know where that discrimination originated: from Washington itself. The best way to stop financial deplatforming isn’t to build a federally mandated data-sharing pipeline. It’s to get the government out of the way.

If consumers want to leave a politically biased bank for a community bank or fintech alternative, that’s great. But those companies should have to negotiate access, just like any other industry. They should also be held to the same standards for privacy and security. Section 1033 does neither.

As David McGarry of the Taxpayers Protection Alliance rightly pointed out, Section 1033 is a ticking time bomb. It’s pitched as “pro-consumer,” but it creates a centralized system ripe for abuse by the next administration that decides your beliefs are “too risky.”

To its credit, the Trump administration has paused the rule and reopened the rulemaking process. Now it should finish the job and scrap the rule entirely. If the goal is to empower consumers and protect liberty, the answer is not more federal mandates; it’s voluntary exchange, private contracts, and a free market where consumers and innovators thrive without bureaucratic interference.

If consumers want to leave a politically biased bank for a community bank or fintech alternative, that’s great. But those companies should have to negotiate access, just like any other industry. They should also be held to the same standards for privacy and security. Section 1033 does neither.

As David McGarry of the Taxpayers Protection Alliance rightly pointed out, Section 1033 is a ticking time bomb. It’s pitched as “pro-consumer,” but it creates a centralized system ripe for abuse by the next administration that decides your beliefs are “too risky.”

To its credit, the Trump administration has paused the rule and reopened the rulemaking process. Now it should finish the job and scrap the rule entirely. If the goal is to empower consumers and protect liberty, the answer is not more federal mandates; it’s voluntary exchange, private contracts, and a free market where consumers and innovators thrive without bureaucratic interference.

​Religious liberty should never be used as a fig leaf for central planning. We don’t need more power handed to the same regulators who helped push people out of the banking system in the first place. We need less.

Section 1033 is the wrong solution to a real problem. It should be repealed, not retooled.