Former FDIC official McKernan appointed to head the Consumer Financial Protection Bureau
The Consumer Financial Protection Bureau (CFPB) is currently grappling with significant operational and leadership turmoil, marked by resignations, cost-cutting measures, and halted or scaled-back enforcement activities. This upheaval has raised concerns about the agency's ability to protect consumers and enforce redress, potentially putting hundreds of millions of dollars owed to Americans at risk.
The current state of the CFPB can be traced back to February 2025, when Jonathan McKernan was named director under the Trump administration's influence. However, there are indications that the White House later altered course on his leadership. Prior to McKernan, the agency saw rapid director turnover, including the firing of Rohit Chopra and the appointment of Scott Bessent as acting director, who ordered the agency to cease its work.
Under the Trump-led CFPB and associated with Project 2025, the agency faced severe function shutdowns and funding cuts. Much of its enforcement operations were suspended or weakened, causing legal experts to describe the agency as "de-fanged." Access to agency data and assets was reportedly ceded to outside teams. Cost-cutting measures included halting many enforcement activities and scaling back regulatory oversight.
Key personnel have resigned amidst these upheavals, although exact names and numbers are not detailed. The loss of experienced staff has contributed to diminished enforcement capacity and institutional knowledge. As a result, more than $360 million in consumer redress owed to Americans is at risk of being revoked or returned to offending companies. Over $120 million intended for victims of illegal financial conduct has already been retracted and returned to wrongdoers, reflecting a shift away from consumer protection towards corporate leniency.
The CFPB is currently undertaking new rulemaking on financial data rights (Section 1033 Open Banking Rule) amid ongoing lawsuits challenging its authority and regulatory changes. This suggests some regulatory activity continues but under constrained circumstances.
The agency's founding purpose to protect financially vulnerable consumers has been compromised according to critics and former officials. The current paradigm under Trump-era naming and McKernan's leadership focuses more on reducing CFPB’s scope and enforcement power rather than robust consumer protection.
In addition to the operational challenges, the CFPB is also facing legal challenges. The National Treasury Employees Union has filed a lawsuit to block orders issued by Acting Director Russ Vought, citing potential workforce purges.
Amidst these challenges, Russ Vought is currently serving as the acting director of the CFPB. The White House has nominated Jonathan McKernan to be the next director of the CFPB. If confirmed, McKernan would return to the Federal Deposit Insurance Corp (FDIC) board in a secondary role.
Notable resignations include Elizabeth Aniskevich, a senior litigation counsel in the CFPB's enforcement division, Lorelei Salas, the supervision chief of the Consumer Financial Protection Bureau, and Eric Halperin, the enforcement chief of the Consumer Financial Protection Bureau, who was accused of insubordination.
The Trump administration is also considering downsizing the FDIC, potentially collapsing it into the Treasury Department or combining its regulatory role with the Office of the Comptroller of the Currency under Treasury. These proposed changes could further impact the CFPB's ability to fulfill its original mission.
In summary, the CFPB currently operates under significant constraint with leadership uncertainty, a depleted workforce, reduced enforcement power, and ongoing legal challenges. The result is a diminished ability to fulfill its original mission, leaving substantial consumer financial redress unsettled and regulatory protections weakened.
- The operational turmoil within the CFPB, combined with the reduced enforcement power and legal challenges, has raised questions about the agency's ability to influence business, politics, and general-news reporting related to consumer finance.
- The compromised state of the CFPB, due to leadership uncertainties, reduced workforce, and diminished enforcement capacities, raises concerns about its ability to affect redress and protect consumers in the broader realm of business and politics, potentially leaving billions of dollars at risk.
