Abdelrahman
Jonathan McKernan, who is nominated to lead the Consumer Financial Protection Bureau, provides testimony before the Senate Banking Committee on Thursday in Washington, D.C.
Kayla Bartkowski/Getty Images/Getty Images North America
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Kayla Bartkowski/Getty Images/Getty Images North America
The Consumer Financial Protection Bureau (CFPB) announced on Thursday that it would discontinue five significant legal actions, including a prominent lawsuit against Capital One. This marks a notable shift for an agency known for its proactive stance against financial entities accused of misconduct during the Biden administration.
Just last month, the CFPB had accused Capital One of not providing over $2 billion in interest payments to customers, misleading them into believing they would receive better rates. Capital One refuted these allegations.
Additionally, the bureau dropped legal actions against Rocket Homes, Pennsylvania Higher Education Assistance Agency, Vanderbilt Mortgage and Finance, and Heights Finance Holding Company.
The announcement regarding the dismissal of the CFPB’s lawsuits coincided with a Senate Banking Committee hearing where President Trump’s nominee for the agency’s leadership, Jonathan McKernan, was being questioned.
Recent weeks have been tumultuous for the CFPB, with the termination of over a hundred employees and the agency nearly closing down after staff were instructed to cease all operations. Employees were locked out of the bureau’s headquarters in Washington, D.C., and the building’s lease was terminated.
Demonstrators gather in support of the Consumer Financial Protection Bureau (CFPB) at their headquarters in Washington, D.C., earlier this month.
Jacquelyn Martin/AP/AP
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Jacquelyn Martin/AP/AP
During his testimony in the Senate, McKernan stated that the agency had exceeded its boundaries under the Biden administration. “We must realign it with its original mission,” he asserted. “We need to optimize its operations and reintroduce accountability to our elected representatives.”
Senator Elizabeth Warren (D-Mass.), a key figure in the CFPB’s establishment following the financial crisis of 2008, remarked during the hearing that she believed the timing of the legal filings was deliberate, although she provided no evidence for her claims. “It appears to me that the timing of this announcement aims to undermine you and indicates who is currently steering this agency: Elon Musk and his cohort,” she expressed to McKernan.
Senator Tina Smith (D-Minn.) shared that she had inquired with McKernan about the ongoing legal matters a day prior and was “promised” that he would “review these lawsuits.” “This raises concerns about who will genuinely lead the CFPB if these situations unfold while your nomination is being evaluated?” she questioned. “My inquiry is, who will ultimately hold the reins?” Smith posed to McKernan. “Senator, if I am confirmed, I will be the director,” he assured.
‘CFPB RIP’
The CFPB is currently overseen by acting director Russell Vought, who also serves as the White House budget director and is a significant figure behind the conservative Project 2025 initiative. The Trump administration has openly expressed its disdain for the bureau and indicated its desire to either eliminate it or significantly reduce its operations. Musk has tweeted “CFPB RIP.”
Consumer advocates criticized the halt of the litigation. “Voters in the past election expressed their frustration with soaring prices, yet the Administration is ceasing crucial work to combat corporate misconduct that siphons billions from consumers every year,” stated Lauren Saunders, associate director of the National Consumer Law Center. “The cases withdrawn today emphasize why the CFPB’s efforts are crucial in investigating practices that deprive hard-working individuals of their funds.”
Before his role at the FDIC, McKernan held various staff positions in the Senate, the Treasury, and the Federal Housing Finance Agency, along with a brief stint at the CFPB. He dedicated nine years as a lawyer specializing in banking and consumer finance laws, as highlighted in his prepared testimony. Several business organizations have endorsed McKernan’s nomination.
