When Jonathan McKernan faces the Senate Banking Committee on Thursday for his confirmation hearing to lead the Consumer Financial Protection Bureau, the biggest questions may focus less on him than on the fate of the CFPB itself. If confirmed, the veteran regulator would be taking over an agency that has been at the center of the Trump administration’s campaign to gut the federal bureaucracy. Agency headquarters have been shuttered since Feb. 10, days after Acting Director Russ Vought ordered staff to stop all work. Probationary employees have been culled, and more cuts are expected. Elon Musk’s team has been embedded with the agency since early February. McKernan’s nomination sent a wave of relief through Washington, which took it as a sign the Trump administration is not planning to eliminate the consumer bureau. (Indeed, administration lawyers said this week in court that “there will continue to be a CFPB.”) But the choice has also puzzled insiders who see a dissonance between the White House’s slash-and-burn moves on the bureau and the elevation of a conventional Republican pick with deep expertise. McKernan was most recently in the GOP minority on the FDIC board, after stints as an adviser at the Treasury Department, the Federal Housing Finance Agency and the Senate. “McKernan is not known to be shy about his views and opinions,” said one industry lobbyist granted anonymity to frankly discuss the Trump administration dynamic without fear of retaliation. “But this White House has also said they want to tightly manage the agencies. It's unclear how that tension plays out, but hopefully they clarify it at his hearing.” Top Senate Banking Democrat Elizabeth Warren, who is credited with conceiving of the agency as a law professor, on Tuesday held a forum to highlight the CFPB’s work along with more than a dozen Democratic senators. “Co-Presidents Donald Trump and Elon Musk are Hell-bent on killing the CFPB,” Warren told MM on Wednesday. “After Mr. Musk tweeted ‘CFPB RIP,’ administration operatives evidently ordered everyone to leave the building, then locked the doors and told people to stop working,” she said. “And now, we’re having a hearing on a nominee to run this agency that Elon Musk has told to do nothing. This is an exercise in gaslighting.” McKernan plans to tell the committee that the agency “has acted in a politicized manner” and “pushed beyond the limits of its statutory authority,” according to his prepared opening statement. “Even if you don’t agree with that view, it’s clear that the CFPB suffers from a crisis of legitimacy,” he will say. “This must be corrected if the CFPB is to reliably do what it’s supposed to do—look out for the American consumer. To that noble end, the CFPB needs to be made accountable to our elected officials and its past excesses need to come to an end.” The hearing will also feature Trump’s selections to lead the Federal Housing Finance Agency, Bill Pulte, and the Council of Economic Advisers, Stephen Miran, as well as Jeffrey Kessler, who has been tapped to run the Commerce Department’s Bureau of Industry and Security. Republicans on the committee plan to play up McKernan’s experience and highlight the need for transparency at the agency, according to an aide familiar with their plans. “During the Biden administration, the CFPB continually overstepped its authority, burdened businesses with excessive politically driven regulation, and drove up costs for consumers,” Banking Chair Tim Scott told MM. “I look forward to hearing Jonathan McKernan’s plans to rein in the CFPB and ensure that the agency works for consumers – not against them.” Democrats have been confounded by the rapid pace of changes at the agency and are hoping the courts will step in. A federal judge this month ordered the CFPB to temporarily halt mass firings; a hearing in that case is scheduled for Monday. IT’S THURSDAY — Thoughts on the CFPB? Send tips to me at kodonnell@politico.com. As always, you can find Sam at ssutton@politico.com.
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