Former FDIC official McKernan appointed to lead Consumer Financial Protection Bureau
The Consumer Financial Protection Bureau (CFPB) and the Federal Deposit Insurance Corporation (FDIC) are undergoing significant changes under new leadership.
CFPB Undergoing Restructuring
The CFPB, currently led by Acting Director Russ Vought, is operating in a severely constrained state due to budget cuts, staff reductions, and a rollback of regulatory initiatives. The 2025 budget was slashed by about 46%, reducing CFPB funding to $249 million. This has forced the agency to downsize and operate with much less capacity than before[1][3].
The agency has experienced personnel changes, with the resignation of Lorelei Salas, the former supervision chief, and Elizabeth Aniskevich, a senior litigation counsel in the CFPB's enforcement division. Vought has also issued a stop-work order, which idled the agency and led to the resignations of its enforcement and supervision chiefs[1].
The CFPB has also scaled back some of its regulatory functions and enforcement activity, reportedly performing minimal actions relative to its historic mandate[3]. A significant example of regulatory rollback is the CFPB’s decision to stay and revisit the final rule on consumer financial data rights under Section 1033 of the Consumer Financial Protection Act of 2010[2].
Despite these changes, consumer complaints filed with the CFPB have increased sharply, with filings rising by nearly 98% compared to early 2024, indicating persistent consumer financial issues but less aggressive enforcement by the agency[4].
FDIC Proposals and McKernan's Nomination
Meanwhile, the FDIC is also facing potential changes. One proposal suggests putting a single person in charge of both the OCC and FDIC, allowing the OCC to take on the FDIC's bank supervision work and potentially its role in resolving failed banks. The FDIC would remain in charge of deposit insurance under this proposal[1].
Another proposal suggests collapsing the FDIC into the Treasury Department or combining the FDIC's regulatory role with the Office of the Comptroller of the Currency under Treasury. The White House has nominated Jonathan McKernan, who recently resigned from the FDIC board, to be the next director of the Consumer Financial Protection Bureau. If confirmed, McKernan would return to the FDIC board in a secondary role[5].
However, it's important to note that these proposals are still under discussion, and no definitive actions have been taken yet. The Trump administration may aim to downsize the FDIC in addition to the CFPB, with cost-cutting efforts at the CFPB including the cancellation of hundreds of contracts worth over $100 million[1].
In a separate development, McKernan, while at the FDIC, typically took a Republican stance against a Democratic majority at the FDIC and agreed with Chopra, the Democratic former CFPB director, on efforts to persuade asset manager Vanguard to sign a stricter passivity agreement[6].
These changes at the CFPB and FDIC are part of a broader Republican effort to limit the powers of these agencies and have been met with criticism from Democrats, including Sen. Elizabeth Warren[1]. The future of both agencies remains uncertain as these changes continue to unfold.
[1] The Hill [2] Bloomberg Law [3] American Banker [4] Reuters [5] The Washington Post [6] American Banker
The changes in the CFPB and FDIC under new leadership have extended to the realm of finance, with both agencies undergoing significant budget cuts and staff reductions [1][3]. This restructuring has also impacted the business world, as the CFPB has slowed down its regulatory functions and enforcement activity [3], while the FDIC has proposed consolidating its roles or merging with other agencies, potentially affecting the general-news landscape of regulatory agencies in the United States [1][5]. These shifts in the financial and political spheres are subjects of ongoing debate and discussion, with concerns being raised by Democrats about the potential weakening of these watchdog agencies [1].
