Trump Takes Aim at Wall Street in Detroit Affordability Speech
President Donald Trump delivered a significant economic address in Detroit on Tuesday, focusing squarely on affordability concerns that have dogged his administration. With midterm elections approaching in November, the White House appears to be implementing emergency measures to address voter frustrations about persistent high prices.
Core Proposals That Shook Financial Markets
During his Detroit appearance, Trump made several announcements that immediately impacted financial markets. He promised to ban institutional investors from purchasing single-family homes, a move targeting corporate ownership of residential properties. More dramatically, he repeated his commitment to cap credit card interest rates at 10% for one year.
Bank stocks tumbled immediately following the credit card rate cap announcement, reflecting investor concerns about profitability constraints. The proposal represents a significant shift from the administration's previous pro-business stance, which included substantial tax cuts and deregulation in 2025.
Political Calculations Behind the Policy Shift
Analysts see clear political motivations behind Trump's new focus on Wall Street. Recent polls show Americans remain skeptical about the administration's efforts to combat inflation, despite some improvement in core inflation metrics that exclude volatile food and energy prices.
"When in political trouble, Trump tends to emphasize populist policies," wrote TD Cowen analysts in a research note. They pointed to similar moves during his 2024 presidential campaign, including proposals to exempt tips and overtime from taxation.
Douglas Holtz-Eakin, president of the center-right American Action Forum, observed: "This feels to me like someone who's grabbing things and trying to see what sticks to make the electorate happier about the economy."
Additional Measures Under Consideration
Trump indicated more affordability initiatives would follow in coming days, including plans to reduce healthcare costs and make housing more affordable. The White House confirmed he will deliver a major speech on these issues later this month at the World Economic Forum in Davos, Switzerland.
Analysts speculate about other potential moves that could further unsettle financial markets. These might include efforts to break up large banks, crackdowns on banking fees, or forced sales of homes owned by private equity firms rather than simply banning future purchases.
Wall Street's Mixed Reaction and Legislative Hurdles
Financial industry responses have ranged from derision to disbelief. Bank trade groups issued a joint statement warning that a 10% interest rate cap would "reduce credit availability and be devastating for millions of American families."
One Wall Street lobbyist noted: "So far the markets seem to think this is all too insane to take seriously. Hence little reaction." Some financial executives have reportedly chosen silence, fearing their firms might become targets of presidential ire.
Both major proposals would require congressional approval, creating uncertainty about their implementation. Some Republican lawmakers have already distanced themselves from aspects of Trump's plans, though Senate Majority Leader John Thune indicated willingness to consider the measures.
"My assumption is at some point it probably gets voted on, and I think that is what we do around here," Thune told reporters. "We cast hard votes. We should be."
Broader Implications for Federal Reserve Independence
Meanwhile, the Justice Department's investigation of Federal Reserve Chairman Jerome Powell raises additional concerns. Many observers interpret this as part of a longstanding effort to pressure the Fed into lowering interest rates, potentially undermining the central bank's independence.
Such pressure could spook bond markets by creating uncertainty about monetary policy direction. Combined with the proposed regulatory changes, these developments suggest a potentially turbulent period ahead for financial markets as the administration prioritizes political messaging over market stability.
L. Thomas Block, Washington policy strategist for Fundstrat, summarized the situation: "This would not be a fun time to be in government relations for a major bank." The coming months will reveal whether Trump's affordability push represents temporary political theater or a fundamental shift in economic policy direction.
