After the Federal Reserve cut rates for the first time in four years, Consumer Financial Protection Bureau (CFPB) director Rohit Chopra joins Brad Smith on Wealth! to discuss how the cut affects consumers and the agency’s work. “We know that consumers since 2022 have been paying billions and billions of dollars in more interest on credit cards, auto loans, and mortgages,” and “refinancing is going to be a way that they can really cut their costs," Chopra tells Yahoo Finance. The CFPB is “pretty laser-focused on making sure that consumers and households actually benefit from this, rather than just the wealthiest and the most powerful in the society getting the fruits of this rate cut.” Chopra says the agency will “be taking some actions to look at how to streamline the refinancing process, making it quicker so more borrowers can benefit.” “Typically, large financial institutions are quick to hike rates when the Fed raises its target but are often pretty slow when it comes to bringing those rates down. Our analysis of the big credit card issuers showed they jacked up interest rates way higher than the Fed raised their rates.” “I really worry that in the very short term, people are just going to see lower rates on their deposits, and it’s going to take some real work to make sure they have savings on their credit cards, mortgages, and their auto loans.” The impact of the rate cut “is really going to vary based on who and what product, but we’re firing on all cylinders to find ways that more and more people can benefit,” Chopra says. Beyond the impact of the rate cuts, the director says the CFPB is “going to continue our serious focus on the role of junk fees that can block successful refinancing and make households deeper in debt.” He explains, “overdraft fees used to be something that was really occasional and a convenience for the paper-check era…but over time, it turned into a multibillion-dollar bonanza for the nation’s biggest banks.” “Our efforts have already wiped away billions of dollars of what I consider unearned profits, and we’re taking further steps to make sure that consumers are actually… opting into this. We issued some policies this week to make it clear that you can’t just opt some consumer into this without meaningfully getting their consent.” “We’ve also proposed some new rules to make it easier for consumers to compare an overdraft loan with a credit card or other type of loan because, in many cases, it is way cheaper to use other forms of credit to meet a shortfall.” “There’s big reforms happening when it comes to junk fees. Our work has brought down tens of billions of dollars across products, credit cards, bank accounts, and more, and we’ve got even more to do.”
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