Former FDIC official McKernan appointed to head Consumer Financial Protection Bureau
Crisis at the Consumer Financial Protection Bureau: Mass Resignations and Operational Shutdown
Since early 2025, the Consumer Financial Protection Bureau (CFPB) has experienced significant changes following the return of Donald Trump as President. These changes have led to operational shutdowns, staff resignations, and allegations of widespread insubordination within the bureau.
Personnel Changes and Allegations
Upon resuming office, Trump dismissed CFPB Director Rohit Chopra despite the bureau’s independent mandate. Scott Bessent was appointed as a temporary replacement, only to be quickly replaced by Russell Vought as acting director, with Jonathan McKernan nominated as the permanent director.
Vought's appointment led to a near-complete operational shutdown of the CFPB. All rulemaking, investigations, enforcement actions, supervision, examination, and publication activities were halted. Employees were ordered to work remotely, and the bureau’s main webpage was disabled, although some internal pages like the complaints portal remained active but under-utilized.
This shutdown has resulted in major morale problems and a sense of futility among staffers, many of whom feel forbidden from doing any work and spend their days idle, fearing that even casual conversations could violate new directives. Several high-ranking officials, including enforcement director Cara Petersen, have resigned in protest.
Allegations of insubordination seem to stem from the tension between career staff wanting to fulfill the agency’s consumer protection mission and new directives forbidding enforcement and investigations.
The McKernan Nomination
McKernan, a former FDIC director, was nominated by Trump to be CFPB Director but his nomination was withdrawn amid the ongoing turmoil. Instead, Trump nominated McKernan for a Treasury Department undersecretary role, indicating a sidelining of CFPB leadership intended to restore or stabilize operations.
During the interim, Vought, an OMB official, ran the bureau as acting director and performed the shutdown actions before McKernan’s nomination was withdrawn.
Cost-Cutting Efforts
In an attempt to cut costs, the CFPB has cancelled hundreds of contracts worth over $100 million. The enforcement division has cut 102 vendor contracts, the director's office has cut 33 contracts, and the supervision unit has cut 16 contracts.
These developments at the CFPB have raised concerns about the future of consumer protection in the financial sector and the potential weakening of regulations aimed at protecting consumers. The situation remains fluid and is being closely watched by various stakeholders.
[1] The Hill [2] Bloomberg [4] NPR
- The operational shutdown at the Consumer Financial Protection Bureau (CFPB), instigated under acting director Russell Vought, has led to a wave of resignations from high-ranking officials, such as enforcement director Cara Petersen, who protested the halt of rulemaking, investigations, and enforcement actions, indicative of the strained relationship between career staff focused on consumer protection and new political directives.
- The ongoing crisis at the CFPB has raised eyebrows in the broader business, finance, and politics sectors, with media outlets like The Hill, Bloomberg, and NPR reporting on the consequences of mass resignations, cost-cutting efforts, and the potential weakening of consumer protections in the financial industry, following changes since Donald Trump's return as President.
