McKernan steps down from his position on the FDIC board
Jonathan McKernan Steps Down from FDIC, Shifts Bank-Fintech Regulations
Jonathan McKernan, a Republican member of the Federal Deposit Insurance Corporation (FDIC) board, has announced his departure from the position. McKernan, who joined the FDIC in 2023, has been instrumental in shaping the corporation's policies, particularly in the area of bank-fintech partnerships.
During his tenure, McKernan advocated for a less interventionist regulatory approach, which has resulted in a significant shift from the Biden-era policies. One of McKernan's most notable actions was the reversal of the open banking rules, specifically Section 1033, which previously mandated free consumer data access for fintechs. This move allows banks like JPMorgan to impose fees on fintechs for accessing customer banking information, altering the data-sharing landscape and challenging fintech business models.
McKernan's stance on bank-fintech partnership governance contrasts sharply with that of Rohit Chopra, the former CFPB Director under the Biden administration. Chopra was known for his robust enforcement and open banking policies, designed to empower fintech innovation and consumer protections. The Biden-era CFPB focused on fostering fintech access to banking data, strengthening consumer financial protections, and vigorous rulemaking.
The regulatory environment under McKernan has been marked by uncertainty due to internal CFPB disruptions and ongoing legal and policy shifts. These developments suggest a more bank-friendly regulatory regime where fintechs may face higher barriers and costs to partnership and data access, potentially impacting innovation and consumer services in the financial sector.
In a related development, McKernan has been vocal about the delay in reaching an agreement on investigating misconduct within the FDIC. An independent review conducted by Cleary Gottlieb Steen & Hamilton found "sexual harassment, discrimination, and other interpersonal misconduct" at the FDIC. However, it took the FDIC more than five months to reach a consensus on investigating allegations of misconduct by agency executives.
As McKernan vacates his seat, the FDIC board will lose its only Democrat member. The FDIC rules mandate that no more than three of the FDIC's five board members can be from the same political party. Currently, FDIC Acting Chair Travis Hill, Rodney Hood, who has also joined the FDIC board, and the Consumer Financial Protection Bureau's acting director, Russ Vought, are all Republicans.
References:
- The Hill
- Bloomberg
- CFPB
- American Banker
- The shift in regulatory dynamics, as seen in the departure of Jonathan McKernan from FDIC, is expected to influence the intersection of finance, business, and politics, particularly regarding bank-fintech partnerships.
- McKernan's exit from the FDIC could have broader implications on the general news landscape, as the FDIC board now lacks a Democrat member, potentially affecting policy decisions that may impact various sectors, including finance and business.
