Senators question McKernan duringconfirmation hearing
In a significant change of pace, the Consumer Financial Protection Bureau (CFPB) is currently experiencing operational and strategic shifts under the leadership of its new nominee, Jonathan McKernan. If confirmed, McKernan would not only lead the CFPB but also regain a seat on the Federal Deposit Insurance Corp. (FDIC) board, vacated for this nomination.
The Trump administration's policies have led to a dramatic reduction in the CFPB's enforcement actions and regulatory activities. Many lawsuits and regulations initiated under previous administrations have been scaled back or reversed. For instance, the CFPB has drastically reduced penalties in existing settlements, including fintech consent orders, and withdrawn proposed regulations related to bank data-sharing and limits on credit card late fees. This reflects a broader administrative effort to narrow the agency's scope, particularly rolling back antidiscrimination enforcement measures championed during the Biden administration.
The CFPB's operational activity has also been affected, with employees reportedly sitting idle or restricted from engaging in substantive work following directives from the White House. Internal morale is low, and staff are reluctant even to communicate with one another, fearing violations of those directives. The agency's press communications have also ceased responding, contributing to a perception that the CFPB is "toothless" in its role overseeing financial institutions and protecting consumers.
However, the CFPB has recently articulated a new approach aligned with a presidential directive aimed at reducing criminal regulatory offenses. It published a policy statement on managing criminally liable regulatory offenses, outlining its process to refer violations to the Department of Justice, with a focus on avoiding overcriminalization. This indicates a strategic pivot towards a narrower regulatory enforcement aligned with the current administration's priorities.
The future plans for the CFPB under McKernan's leadership seem oriented towards minimal enforcement actions, regulatory oversight, and focusing on compliance with executive directives restricting the agency's scope of authority. The Trump administration's reduction of the agency's funding by nearly half further constrains its capacity, making a swift return to robust enforcement and consumer protection activities unlikely.
McKernan has pledged to rein in the CFPB, bring its "past excesses" to an end, and refocus the agency's mission, right-sizing it and reinstituting accountability. He argues that the success of the CFPB should not be evaluated based on dollar numbers or enforcement count, but on whether we have fair, transparent, competitive markets.
The CFPB's future remains uncertain, with concerns raised by Senators Jack Reed, Elizabeth Warren, Tina Smith, and others about McKernan's position. The agency has experienced significant changes in leadership, a stop-work order, headquarters closure, resignation of enforcement and supervision chiefs, and job cuts recently. As the confirmation process continues, the CFPB's role in protecting consumers and overseeing financial institutions hangs in the balance.
References: [1] Bloomberg Law, CFPB's McKernan Plans to Rein in Agency, Bring Excesses to an End, 11 June 2021,
The CFPB, under McKernan's proposed leadership, appears to be shifting its focus towards reduced regulatory enforcement and greater compliance with executive directives, potentially impacting the business and finance sectors, as well as general news. This change might be influenced by the Trump administration's policies that have led to a decrease in the CFPB's enforcement activities, scaling back or reversing many previous regulations.
However, the future of the CFPB is uncertain due to ongoing concerns from Senators and recent significant changes in leadership, which have raised questions about its ability to protect consumers and oversee financial institutions effectively, particularly in the political context.
