EVEN MORE CFPB NEWS AS PERMANENT CFPB DIRECTOR IS NOMINATED BY PRESIDENT TRUMP

Well, the whirlwind of the first few weeks of the Trump administration continues.  And there is more news about the Consumer Financial Protection Bureau (CFPB).

A permanent CFPB Director has been nominated by President Trump.  He is Jonathan McKernan who currently serves as a Republican member of the FDIC Board.  His nomination will require Senate confirmation so he will not be taking over at CFPB for at least a matter of weeks – maybe months.

Remember what brought us here.  Last week President Trump designated his newly-confirmed Secretary of Treasury Scott Bessent to serve as Acting Director of the CFPB.  Secretary Bessent immediately placed a hold on all new CFPB regulations and enforcement actions that had not been finalized and made effective.  This basically halted the regulatory arm of CFPB from any further action until a permanent CFPB Director could be nominated and confirmed by the Senate.

This week President Trump designated his new Director of the Office of Management and Budget (OMB) Russell Vought to serve as Acting Director of the CFPB replacing Bessent.  Vought sent all CFPB employees home, told them to take no further actions until authority was granted in writing and dismissed the CFPB’s Director of Supervision Lorelei Salas and the CFPB’s Director of Enforcement Eric Halperin.

Now the president has nominated a permanent CFPB Director that, upon confirmation by the Senate, will go into the position as the actual Director of the CFPB – not as Acting Director.

McKernan actually has background as a bank regulator having served on the FDIC Board.  He was known there as a proponent of less activist regulation.

It is certain that, if he has been nominated by President Trump to head the CFPB, he will be the permanent Director that will carry out the regulatory, supervisory and enforcement duties of the Bureau in accordance with the obvious approach the president wants to see implemented and has been represented by the Bessent and Vought actions.

In fact, Russell Vought will remain as Acting Director until Mr. McKernan is confirmed.  In the interim weeks or months that he will serve as CFPB Acting Director, Mr. Vought could essentially dismantle or revamp the operational structure of the CFPB to the point where Mr. McKernan can walk into a much more lean and considerably less activist CFPB.

I remind you that the CFPB cannot be repealed except by an act of Congress.  While that conceivably could happen, it is frankly unlikely (pun intended, as the CFPB was created by the Dodd-Frank Act – see what I did there).

So, unless the CFPB is actually disbanded through action of Congress to repeal the law that created it, the most the Trump administration can do is to neuter the Bureau.

That seems to be the intent – at least for the next four years.

After the 2028 election, it is possible that if a new Democrat president is elected that the CFPB will be re-stocked with staff and again return to its activist tendencies demonstrated during the Obama and Biden presidencies.  However, it appears clear that as long as Trump is in office the CFPB is only going to be a shadow of its previous self in both regulatory and enforcement actions.

We will continue to monitor the changes as they come down on the credit union regulatory front at both the CFPB and at NCUA.  Interesting times indeed.

Until next time.

Dennis Dollar