Major Wall Street banks are pushing back on some of President Donald Trump’s ideas to lower the US cost of living ahead of the mid-term elections, while suggesting others in an effort to shape policy, sources familiar with the discussions said.

Wall Street has expressed doubts about the effectiveness of some of Trump’s proposals to improve affordability, such as capping credit card interest rates, which have hit major bank stocks.

Banks are instead suggesting options such as encouraging more retirement savings and earlier transfer of wealth from parents to children, the sources said.

However, none of the ideas are likely to have a significant impact on affordability, which has become a hot-button issue for voters ahead of the November elections, added the sources, who spoke on condition of anonymity.

Sources told Reuters during the annual meeting of the World Economic Forum in Davos, Switzerland that they were talking to Trump administration officials and awaiting clarification on policy before taking any action.

“We say, ‘What are you trying to achieve? Let’s find ways to help you,'” said a top US banking executive.

Economic issues, such as the rising cost of living for Americans, helped Trump win the 2024 presidential election.

While inflation has come down from its peak since the Covid-19 pandemic, prices for necessities like housing and groceries remain high, threatening Republicans’ prospects in the mid-term elections.

Trump has made a flurry of proposals to lower the cost of living. These include plans to lower credit card rates and allow investors to use some of their retirement funds to make a down payment on a home.

He is expected to address the issue in Davos on Wednesday.

The White House and the US Treasury did not immediately respond to requests for comment on the discussions with the banks.

Right to focus on affordability

Some bank CEOs have publicly supported the focus on affordability, even if they disagree with limits on credit card fees. Investors also questioned the effectiveness of letting people make downpayments from their retirement accounts, as the biggest issue was the supply of homes.

Citigroup CEO Jane Fraser said Tuesday that she does not expect Congress to approve a cap on credit card interest rates.

“The president is right to focus on affordability,” Fraser said in an interview with CNBC from Davos. “But capping rates will not be good for the US economy,” she added.

Sources said price caps affect the availability and pricing of credit cards. One way banks could respond if put in place is, for example, by significantly reducing the size of credit lines they offer to customers to limit losses, Eck said.

US Treasury Secretary Scott Bessant said on Tuesday that it is not unreasonable to debate the practices of credit card companies and that many things can be considered.

Sources said the Trump administration is engaging with banks to shape policy.

One said an effective way to change the proposal to let Americans borrow from their 401K retirement savings for housing downpayments is to let parents and grandparents do it for their children.

The logic is that they will have more money in their pension plans than they did at the start of their careers.

However, one problem is that without an additional supply of housing, it could put more pressure on prices. One idea to increase housing supply is to allow older people to sell their homes tax-free, the person said.

But changing the housing situation will require “patience that nobody has”, the source said.

Asked how the Trump administration responded to some of these ideas, the source said: “They’re listening. They’ve got smart people over there working hard on this stuff.”