When it comes to news about the current and future state of the Consumer Financial Protection Bureau, it seems like all the news tends to break at once. There is nothing for a few days, and then bam, two or three big developments all at once. This roundup summarizes yesterday’s Appeals Court hearing on whether a lower court’s injunction blocking the government from dismantling the bureau was a case of judicial overreach, and an update on the nomination of Jonathan McKernan to be the Bureau’s new director, along with comments from the top of both the Senate Banking Committee and the House Financial Services Committee.
Appeals Court Questions Injunction
A panel of three judges from the Court of Appeals for the District of Columbia heard arguments yesterday on the ongoing battle over the Trump administration’s efforts to dismantle the CFPB. In a temporary decision, the panel had already lifted some provisions of a District Court ruling that had previously blocked mass terminations, contract cancellations, and the destruction of records at the CFPB. The Justice Department had filed an appeal, arguing that Judge Amy Berman Jackson’s broad injunction exceeded her authority and obstructed the White House’s ability to manage its executive agencies.
- However, the panel’s decision was not a full victory for the government. It allowed the government to move forward with plans to restructure the agency but also maintained provisions of the injunction that prevent the termination of contracts, firing of employees, and destruction of CFPB records. The judges indicated that they would further review the case, providing the government with a temporary reprieve while the court considers the merits of the appeal.
- During the hearing, Judge Cornelia Pillard, an Obama appointee, expressed concern about the harm to the public if the agency is allowed to function at a minimal level. She emphasized the critical role the CFPB plays in protecting vulnerable populations, such as seniors being misled into costly financial products. In contrast, Judges Neomi Rao and Gregory Katsas, both Trump appointees, questioned whether a streamlined CFPB workforce could still perform its statutory functions and whether the court’s injunction was too broad.
- The government argued that Jackson’s injunction was a “programmatic lawsuit” that micromanaged the executive branch’s discretion. Still, the judges seemed skeptical about the administration’s claim that such drastic measures were necessary to maintain operations at the agency. The panel suggested that the case might be remanded to Jackson’s court for further clarification.
Republican’s Still Want Smaller CFPB
As the legal battle over the future of the CFPB continues, two key Republican lawmakers — Sen. Tim Scott [R-S.C.] and Rep. French Hill [R-Ark.] — are making it clear that they are committed to reining in the agency. Both spoke recently about their efforts to reshape the CFPB, focusing on reducing its power and limiting its scope.
Sen. Scott, who chairs the Senate Banking Committee, revealed that he expects a full Senate vote on Jonathan McKernan’s nomination to lead the CFPB by early May. McKernan’s nomination was advanced by the Senate Banking Committee last month. Scott indicated that the Senate is “ready to move” on more nominations, including McKernan’s, which could significantly affect the CFPB’s future direction.
Sen. Scott, a vocal critic of the CFPB’s size and scope, stated that the “smaller, the better” when it comes to the CFPB. He applauded the Trump administration’s quick action to install Russell Vought as acting director and praised his efforts to shift the agency’s focus. However, Sen. Scott acknowledged the pushback the administration has faced over plans to cut the CFPB’s workforce, including the controversial proposal to reduce the agency’s staff by more than 1,000 employees.
Rep. Hill, chair of the House Financial Services Committee, meanwhile echoed Scott’s sentiments. Speaking at an American Bankers Association event, Rep. Hill noted that he and Sen. Scott are working together to push back on the regulatory overreach of the CFPB. Rep. Hill also discussed ongoing efforts to craft a legislative agenda aimed at placing stricter controls on the agency.
In addition to pushing for a restructured CFPB, Rep. Hill emphasized the need for a bipartisan approach to oversight. The duo is working to ensure that the CFPB is subject to the regular congressional appropriations process, which would allow for greater scrutiny and oversight of its actions.
