Trump’s Credit Card Push And Fed Turmoil Shake Washington

On January 16, 2026, the White House’s economic agenda took center stage amid an unusual confluence of policy proposals, criminal investigations, and public spats between the Trump administration and the nation’s central bank. At the heart of the drama: President Donald Trump’s push for sweeping credit card reforms, a contentious probe into Federal Reserve Chair Jerome H. Powell, and the increasing prominence of Trump’s top economic adviser, Kevin Hassett, who finds himself both a key architect of policy and a possible contender for the Fed’s top job.

It all began a week earlier, when President Trump called for a dramatic cap on credit card interest rates—demanding that banks limit rates to no more than 10%. The proposal, announced with characteristic flair, was met with swift and broad rejection by industry executives and their lobbyists. According to CNBC, bankers warned that if forced to comply by the president’s January 20 deadline, they’d rather close many customer accounts than offer cards at such low rates.

Facing industry pushback, the administration appeared to shift gears. On January 16, White House economic advisor Kevin Hassett floated a new idea: large U.S. banks could voluntarily provide credit cards to underserved Americans—those with steady incomes but little access to credit. "They could potentially voluntarily provide for people who are in that sort of sweet spot of not having financial leverage very much because they don’t have access to credit, but they have enough income and stability in their lives so they’re worthy of credit," Hassett told Fox Business host Maria Bartiromo. He added, "Our expectation is that it won’t necessarily require legislation, because there will be really great new ‘Trump cards’ presented for folks that are voluntarily provided by the banks."

The administration’s recalibration seemed to acknowledge the political and economic difficulties of pushing through sweeping changes to the credit card industry. As CNBC noted, the comments indicated a move away from broad, potentially disruptive reforms toward a more targeted, voluntary approach that might avoid legislative hurdles and the risk of hurting consumer spending. However, the plan’s details remained fuzzy. Major credit card issuers and a bank lobbyist representing big lenders told CNBC that, as of January 16, they hadn’t yet had any discussions with the administration about the "Trump card" concept.

Meanwhile, the White House’s economic team was grappling with another, even more explosive issue: the future of the Federal Reserve’s leadership. On the same day, President Trump publicly expressed hesitation about naming Hassett to replace Jerome H. Powell as Fed chair, despite widespread speculation that Hassett was the leading contender. Trump praised Hassett’s work defending the administration’s economic agenda, especially on television, but told him during a White House event, "I actually want to keep you where you are, if you want to know the truth." The president added, "I would lose you. It’s a serious concern to me."

The process to replace Powell—whose term expires in May—was further complicated by a bombshell revelation: the Justice Department had served the Fed with grand jury subpoenas related to a $2.5 billion renovation of its Washington headquarters. According to The New York Times, the investigation centers on whether Powell lied to Congress about the scope of the renovations during testimony last summer. The probe marked a dramatic escalation in the administration’s long-running feud with the central bank, which Trump has repeatedly accused of keeping interest rates too high.

Powell, in a rare video statement, accused the Trump administration of using criminal charges to pressure the Fed into lowering rates. Lawmakers from both parties, including Republicans who had largely stayed silent during Trump’s earlier attacks on the Fed, rushed to Powell’s defense. Every living former Fed chair and central banks around the world issued statements condemning the investigation, warning that similar prosecutorial attacks in other countries had led to "highly negative consequences" for the cost of living and had "no place" in the United States. Central banks globally offered "full solidarity" to Powell, as reported by The New York Times.

Kevin Hassett, for his part, tried to strike a conciliatory tone. In an interview with Fox Business, he said, "I expect—Jay’s a good man—I expect that there’s nothing to see here, that the cost overruns were related to things like asbestos, as he says. But I sure wish that they had been more transparent." Hassett emphasized the importance of transparency for all branches of government, stating, "All corners of government—the Fed, the White House, everything—we have a responsibility to the American people to be transparent. And I think that, if I were Fed chair, that I would insist on transparency. I probably would’ve answered the questions right away."

Despite the controversy, Hassett’s stock within the administration appeared to remain high. At a White House roundtable on rural healthcare later that day, Trump again praised Hassett’s performance on television, saying, "You were fantastic in television today. You’ve done incredible. We don’t want to lose him." Still, Trump’s reluctance to let Hassett leave his post as director of the National Economic Council left the outcome of the Fed chair search uncertain.

The criminal investigation itself has become a flashpoint in the debate over the independence of the Federal Reserve—a bedrock principle of modern economic policy. Allies of Trump had spent months accusing the Fed of mishandling the costly renovations, and the Justice Department’s probe is now scrutinizing whether Powell misled Congress. Jeanine Pirro, the U.S. attorney for the District of Columbia, insisted her office takes decisions "based on the merits," while Trump claimed he did not know about the investigation before it was reported in the press.

As the week drew to a close, the administration found itself at a crossroads: balancing the president’s populist demands for lower borrowing costs and affordable credit with the realities of financial markets, legislative gridlock, and the need to maintain the credibility and independence of the nation’s central bank. The episode served as a reminder that, in Washington, even the most technical matters—like the cost of a renovation or the details of a credit card—can become deeply political, with consequences that ripple far beyond the corridors of power.

For Kevin Hassett, the moment is both an opportunity and a test. Whether he remains Trump’s top economic adviser, becomes the next Fed chair, or helps broker a compromise on credit policy, his role in shaping the administration’s economic legacy seems assured. But as the events of January 16, 2026, made clear, the path forward is anything but predictable.