President Donald Trump has nominated Jonathan McKernan as the new director of the Consumer Financial Protection Bureau (CFPB), even as the agency experiences significant upheaval, PYMNTS reports.
McKernan, who recently served as a board member of the Federal Deposit Insurance Corp. (FDIC), was named to the position on Wednesday, February 12, according to multiple reports.
The nomination comes amid a period of uncertainty for the consumer watchdog agency. Just days before McKernan’s appointment, Russell Vought, the acting director of the CFPB and head of the Office of Management and Budget (OMB), took steps to effectively halt the agency’s operations.
Vought ordered CFPB offices closed, instructed employees to work remotely, and suspended enforcement actions. Additionally, he announced that the agency would decline its next round of funding from the Federal Reserve, arguing that its existing balance of $711.6 million was excessive given current fiscal conditions.
“The Bureau’s current balance of $711.6 million is in fact excessive in the current fiscal environment,” Vought wrote on social media platform X (formerly Twitter). “This spigot, long contributing to CFPB’s unaccountability, is now being turned off.”
Amid these developments, dozens of CFPB employees were reportedly dismissed on Tuesday, February 11. According to a Wired report, the terminations were communicated via email, though a formatting error resulted in messages addressing workers as “[EmployeeFirstName][EmployeeLastName]” instead of their actual names.
The email informed employees of their removal from federal service, citing that their skills no longer aligned with the agency’s needs.
With the agency’s operations stalled and its workforce reduced, some experts argue that the CFPB is now in a regulatory limbo.
Karen Webster, CEO of PYMNTS, wrote earlier this week that the uncertainty surrounding the CFPB is leaving financial institutions to navigate compliance without clear guidance.
Former Assistant Treasury Secretary Amias Gerety, who served under the Obama administration, expressed concern over the agency’s suspension, calling it “a lawless act.”
“If nobody’s home, you have financial services entities just trying to make their best guess,” Gerety told Webster. “‘Do your best’ is not a great way to run a financial services company.”
Gerety, now a partner at QED Investors, also pointed out that the CFPB has legally mandated responsibilities under its founding legislation, making its suspension more than just an administrative shift.
“We are a nation of laws, not men,” Gerety said. “The CFPB has obligations. Congress wrote a bunch of ‘shalls’ into the law. These are not ‘mays,’ these are not ‘authorized to’—these are absolute requirements that the CFPB director has to do.”
McKernan’s appointment raises questions about the future direction of the CFPB. While some view the move as part of a broader effort to scale back financial regulation, others worry that limiting the agency’s power could leave consumers more vulnerable.
