Ho-hum. Another day, another onslaught of news and changes at the Consumer Financial Protection Bureau. The biggest news came Tuesday night, when President Trump submitted the name of Jonathan McKernan to the Senate to be the next director of the Bureau. McKernan was most recently a board member of the Federal Deposit Insurance Corp. Also yesterday, the heads of the enforcement and supervisory units at the Bureau resigned and the Bureau announced a series of cuts aimed at reducing its expenses and footprint.
Key Developments:
- McKernan’s Appointment: McKernan has experience at the Treasury Department, Senate Banking Committee, and the Federal Housing Finance Agency. He has been at the FDIC since 2023. Before that, he was a counsel to Ranking Member Sen. Pat Toomey [R-Penn.] on the staff of the Senate Banking Committee. He also served as a Senior Counsel at the FHFA, a Senior Policy Advisor at the Department of the Treasury, and a Senior Financial Policy Advisor to Sen. Bob Corker [R-Tenn.]. Prior to his government service, McKernan was an attorney in private practice focused on matters under the banking and consumer financial laws.
- Staff Resignations and Firings: Following Vought’s stop-work order and his freeze on the agency’s operations, several key officials at the CFPB, including Eric Halperin and Lorelei Salas, the directors of enforcement and supervision, resigned in protest. Additionally, around 70 probationary employees, including enforcement division attorneys, were terminated in a cost-cutting maneuver, further unsettling staff at the agency.
- Department of Government Efficiency’s Role: Under Vought, the CFPB has seen an infiltration by Musk’s Department of Government Efficiency (DOGE), which has been tasked with identifying and eliminating wasteful spending. DOGE’s entry into the agency has sparked concerns about potential data security risks, as the team has been given access to sensitive consumer and industry data.
- Financial Cuts and Cybersecurity Concerns: Vought has also moved to cancel over $100 million in vendor contracts, including those related to cybersecurity and other key internal management systems. These cuts could put the agency’s ability to protect sensitive data and its broader enforcement capabilities at risk.
What’s Next:
- Senate Confirmation Battle: McKernan’s confirmation by the Senate will be closely watched, as both Democrats and Republicans are keenly focused on the future direction of the CFPB. Senate Democrats, including Sen. Elizabeth Warren [D-Mass.], have already expressed concerns about the agency’s ability to fulfill its mission under the current leadership, with Musk’s influence looming large.
- Democratic Pushback: A group of 191 House and Senate Democrats has called for the removal of Musk’s operatives from the CFPB, citing the risk of undermining consumer protections. The Democrats have vowed to fight back against the dismantling of the agency and are prepared to take legal and legislative action to defend its mission.
