Do you think they would just cut lines of credit immediately and require payment on the amount reduced?
Or maybe all new credit issues is 10% and existing remains at the old rate?
Discussion
Great questions. I'm sure banks have tons of risk nerds evaluating all of the possibilities.
If I were running the bank, I'm calling them. Not risking my career or the company if I'm forced to adhere to Government requirements.
Dumb question, but what does "calling them mean?"
I'm asking because I have outstanding credit balance so I wonder if it will just mean I have to pay it off immediately or something. Although it's technically unsecured so I'm not sure how they call the loans back
Calling a loan means the lender would demand immediate repayment.
Right now, the fed fund rate is like 4.3% so to cap banks at 10%, that delta juice isn't worth the squeeze. The fact they can get 15-25% from subprime borrowers funds the whole kit and kaboodle.
If capped at 10%, they'd just be better off investing the money themselves versus offering credit services.
I see. What would be the "stick" they would use to get the loans back? Tanking credit score? Fees that don't fall under APR classification?