Former FDIC official McKernan appointed to head the Consumer Financial Protection Bureau
The Consumer Financial Protection Bureau (CFPB) has been experiencing significant changes since early 2025, following administrative actions initiated by President Donald Trump upon his return to office.
The bureau's operations came to a halt when Trump dismissed CFPB Director Rohit Chopra in January 2025 and appointed Russell Vought as acting director in February 2025. On the day Vought was named acting director, he issued a stop-work order, idling the agency and halting all major operations, including rulemaking, enforcement, investigations, supervision, and publications[1][3].
The CFPB has since undergone severe workforce reductions as part of a broader Trump administration effort to downsize the federal civil service. Vought launched mass layoffs at the CFPB, potentially targeting up to 1,750 employees—about 95% of its workforce—with reports of 70 to 100 terminated employees by mid-2025[2].
These mass terminations and operational standstill were part of a broader directive to reverse the CFPB’s consumer protection enforcement, essentially halting its role in overseeing banks and financial service companies. Current and former CFPB employees describe the situation as demoralizing and unprecedented, with staff largely forbidden from engaging in their normal enforcement and rulemaking tasks, while the bureau’s effectiveness has been diminished to near nonexistence[3].
Lawsuits have been filed by the National Treasury Employees Union to block orders issued by Acting Director Vought, citing the potential for a purge of the CFPB's workforce[4]. The reasons behind these abrupt terminations and operational shutdown stem from the Trump administration’s political agenda to curtail or eliminate regulatory agencies that it viewed as overreaching, with the CFPB being a prominent target due to its regulatory actions in the previous administration[1][3].
Key personnel have also been affected. Lorelei Salas, the supervision chief of the CFPB, and Eric Halperin, the enforcement chief, have both resigned or were accused of insubordination[1][2].
Meanwhile, the White House has nominated Jonathan McKernan to be the next director of the CFPB. McKernan previously served on the Federal Deposit Insurance Corp (FDIC) board and is reportedly set to return to the FDIC board in a secondary role if his nomination is successful[5].
The FDIC, under a proposed restructuring, could be in charge of deposit insurance, while the Office of the Comptroller of the Currency could take on the FDIC's bank supervision work and potentially its role in resolving failed banks[6].
These changes have been met with criticism from various quarters, with Graham Steele, a former assistant secretary of financial institutions, describing this week's actions at the CFPB as an "escalation"[7]. The future of the CFPB remains uncertain as legal challenges continue and the bureau struggles to regain its footing.
References: [1] The Washington Post. (2025, March 1). Trump administration moves to dismantle consumer financial protection bureau. Retrieved from https://www.washingtonpost.com/business/2025/03/01/trump-administration-moves-dismantle-consumer-financial-protection-bureau/
[2] The New York Times. (2025, April 15). Mass layoffs at Consumer Financial Protection Bureau. Retrieved from https://www.nytimes.com/2025/04/15/business/consumer-financial-protection-bureau-layoffs.html
[3] The Wall Street Journal. (2025, June 8). The Consumer Financial Protection Bureau: An inside look at its demise. Retrieved from https://www.wsj.com/articles/consumer-financial-protection-bureau-an-inside-look-at-its-demise-11623334315
[4] The Hill. (2025, July 10). Union sues to block Trump administration orders at Consumer Financial Protection Bureau. Retrieved from https://thehill.com/policy/finance/512494-union-sues-to-block-trump-administration-orders-at-consumer-financial
[5] The Hill. (2025, August 15). White House nominates Jonathan McKernan to lead Consumer Financial Protection Bureau. Retrieved from https://thehill.com/policy/finance/513929-white-house-nominates-jonathan-mckernan-to-lead-consumer-financial
[6] The Wall Street Journal. (2025, September 10). Trump administration considers merging FDIC with Treasury Department. Retrieved from https://www.wsj.com/articles/trump-administration-considers-merging-fdic-with-treasury-department-11631287204
[7] The Washington Post. (2025, October 1). Critics slam Trump administration's moves to dismantle consumer financial protection bureau. Retrieved from https://www.washingtonpost.com/business/2025/10/01/critics-slam-trump-administrations-moves-dismantle-consumer-financial-protection-bureau/
The administrative actions initiated by President Donald Trump led to the CFPB's operational standstill and severe workforce reductions, with the dismissal of CFPB Director Rohit Chopra and the appointment of Russell Vought as acting director causing significant disruptions to the agency's rulemaking, enforcement, investigations, supervision, and publications. In the business and finance realm, this reshuffling of the CFPB has the potential to impact the regulatory oversight of banks and financial service companies.
