‘who's Going To Be In Charge Here?’ Democrats Press Trump's Cfpb Pick

The Consumer Financial Protection Bureau said Thursday it has dropped major lawsuits against four companies — news that came just as President Donald Trump’s nominee to lead the beleaguered agency was testifying before Congress.

Some Democratic lawmakers said the timing was no coincidence.

The CFPB filed notices in court to abandon the cases, including one against Capital One bank, during Jonathan McKernan’s confirmation hearing before the Senate Banking Committee. To Democrats, that underscored the tension between the White House’s slash-and-burn approach to the bureau and the more conventional regulator Trump has selected to run it.

“It seems to me the timing of that announcement is designed to embarrass you and to show exactly who is in charge of the agency right now — Elon Musk and his little band of hackers,” Sen. Elizabeth Warren (D-Mass.), the top Democrat on the panel, told McKernan. Sens. Tina Smith (D-Minn.) and Mark Warner (D-Va.) also questioned how much authority McKernan would have.

Warren and other Democrats have fumed over moves by the Trump administration to cripple the consumer bureau, which has been a major target of Republicans since its inception in 2011. Acting Director Russ Vought, who also serves as Trump's budget director, ordered employees to stop all work and shuttered agency headquarters earlier this month. Federal judges temporarily blocked the administration from moving ahead with mass firings of CFPB employees, deleting vast troves of agency records or defunding the bureau.

Vought earlier this week announced that the CFPB had dropped another lawsuit against fintech lending platform SoLo, saying the previous administration under former Director Rohit Chopra had “tried to destroy” the company. He suggested that the agency would continue to dismiss other cases, writing that “the weaponization of ‘consumer protection’ must end.”

McKernan, a veteran Republican regulator, repeatedly stressed to lawmakers that he intended to uphold the law and execute the CFPB's mission, which was laid out in the landmark Dodd-Frank law of 2010.

But Warren said after the hearing that she was troubled by his answers, including his refusal to praise the agency for returning some $20 billion to harmed consumers. She also said she believes he won't really be in charge of the bureau.

“I am concerned by how he tried to dodge and weave over who's running this agency,” she said.

“While he's in the middle of his sworn testimony, Elon Musk effectively shut down multiple lawsuits that the agency was pursuing to recover money for people who were cheated,” she said. “I think that was a way to try to embarrass Mr. McKernan and show that he ain't the guy running the show.”

In a series of court filings, the agency said it was dismissing lawsuits filed during the waning months of the Biden administration against four companies, including Capital One. The others are student lender Pennsylvania Higher Education Assistance Agency, and mortgage lenders Rocket Companies and Vanderbilt Mortgage & Finance.

The CFPB voluntarily dismissed all four cases with prejudice, preventing the bureau from re-filing the same lawsuits against the companies in the future.

Smith, the Minnesota Democrat, also pointed to the dropped lawsuits as evidence that McKernan will be sidelined by Vought.

“This makes me question who’s really going to be in charge of the CFPB if this is happening while your nomination is being considered,” Smith said. “Who’s going to be in charge here?"

McKernan replied, “Senator, if I’m confirmed, I’m the director.”

Smith persisted: “Well it’s not clear to me, because at the moment that we’re sitting here talking about you, speaking on this responsibility, Russell Vought or others are dismissing lawsuits that you just told me you were going to have the opportunity to review before they’re dismissed.”

A spokesperson for Vought did not immediately respond to a request for comment on the latest lawsuit dismissals. The court filings were made by Mark Paoletta, who is a top aide to Vought at OMB and who is serving as the CFPB’s chief legal officer.

Warner, the Virginia Democrat, asked McKernan point-blank, “Are you going to be able to stand up to Director Vought?”

McKernan, a familiar face who worked as a Republican aide on the committee, repeatedly said he would follow the law, adding, “I think my record speaks to my willingness to assert my point of view.”

Warren wasn’t having it: “I appreciate all of your happy talk about following the law, but I think we all know what’s going on here, and that is Elon Musk is determined to shut down the agency,” she said.

Sen. Angela Alsobrooks (D-Md.) sought to pin McKernan down on the agency’s funding. Vought has requested no funds from the Federal Reserve for the agency’s next fiscal quarter budget.

“As I’ve said, CFPB is a product of statute,” McKernan said. “It’s a question for our elected leaders, the future of the CFPB and how we do consumer protection.”

“Again, do you support maintaining funding?” Alsobrooks cut in.

“If we’re going to have the CFPB as presently constituted, then we will need funding to perform our statutory responsibilities,” McKernan said, in a tacit acknowledgment that the future of the agency isn't clear.