Meet Jonathan McKernan, the next director of the consumer watchdog his colleagues want ‘deleted’

Jonathan McKernan’s nomination to be the next permanent director of the Consumer Financial Protection Bureau (CFPB) didn’t come out of left field, but it still surprised many housing finance insiders given all that’s happened at the consumer watchdog over the last two weeks.

McKernan’s nomination came on the heels of Elon Musk‘s baby-faced DOGE lieutenants gaining access to agency files and Acting Director Russ Vought ordering a full freeze of the agency. President Trump himself this week said the CFPB was “very important to get rid of.”

“It was also a waste,” he said at a press conference on Monday. “There was a bad group of people running it … That was a vicious group of people. They destroyed a lot of people.”

Yet in McKernan, the Trump administration has nominated a veteran financial regulator with a deep understanding of housing finance issues and a streak of “old school conservatism,” Washington insiders told HousingWire. Unlike Project 2025 architect Vought, who this week approved the firing of dozens of CFPB staffers, nothing in McKernan’s track record suggests he is a bomb-thrower intent on dismantling government.

He would be joining the CFPB following a term on the board of directors at the Federal Depository Insurance Corporation (FDIC), where he pushed repeatedly for more oversight of large asset managers, saying their size and concentrated ownership could give firms undue influence over the management and strategy of U.S. banks. (Rohit Chopra was in agreement.)

McKernan also previously worked at the Federal Housing Finance Agency, the Treasury Department and was counsel to Ranking Member Pat Toomey (R-PA) on the staff of the Senate Committee on Banking, Housing and Urban Affairs. He was also a senior policy advisor to Senator Bob Corker (R-TN).

Should McKernan be confirmed by the Senate and not be hamstrung by the “delete camp” of his own party, he would likely return the agency to an era more closely resembling that of Kathy Kraninger than Chopra, multiple sources in housing politics said.

“Jonathan’s a serious regulator, so it would seem that from their nomination, the intention would be to make the CFPB a more tightly focused, transparent, conservative steward of the statutory mandate that the agency’s got,” said Jim Parrott, who served in the Obama White House and co-owns housing policy consulting firm Parrott Ryan.

“There is a camp among some Republicans that would like to see the CFPB deleted, but I think there’s probably a larger segment of Republicans who are involved in the financial sector who see the CFPB is an agency that provides standardization, that provides enforcement of norms that ensures that bad actors don’t ride roughshod over consumers of the rest of the market,” he said. “They do a bunch of things that most conservatives and Republicans would actually probably like to see done.”

Peter Idziak, a senior associate at mortgage law firm Polunsky Beitel Green, believes the nomination signals a reform mindset at the CFPB.

He expects a McKernan-led CFPB to pursue fewer enforcement actions and move away from the combative style of regulation Director Rohit Chopra put in place during the Biden administration.

“I think you’ll see a move away from the disparate impact theory that is underpinning a lot of the fair lending actions that the CFPB has been promoting,” he said. “And I think you’ll see a move away from regulation through enforcement and regulation through blog posts, sort of this jawboning of industry to revise or eliminate certain practices that Chopra felt weren’t consumer friendly without the CFPB going through a formal rulemaking process.”

Scott Olson, who leads the Community Home Lenders of America, a trade group for smaller mortgage lenders, said he’s hopeful McKernan can begin the process of removing duplicative regulation for smaller lenders, which makes mortgages more expensive and has resulted in industry consolidation.

“One of the things that the CHLA believes is there’s so much duplicative regulation here, where you have states that are already our primary regulators,” he said. “We have exams all the time with states, and then we have exams in the CFPB. There’s this over-regulation… the last place where you need a vigorous player in Washington to oversee consumer issues is the mortgage industry.”

Olson argued that there are other corners of the financial space without much regulation, consumer protection or supervision that would benefit from a national regulator. But mortgage is already highly regulated. 

“Our members do somewhere between 90 and 100% government agency loans — FHA VA, RHS, or Fannie [Mae] and Freddie [Mac], and those loan products are completely regulated. It’s another reason why we don’t think there needs to be a lot of energy on regulation of us, because we’re not coming up with products that need a greater look at.”

The CHLA is also hoping the agency under McKerney removes the 486-page offender registry.

“It’s totally redundant, the final rule is 486 pages. For a small lender, they have to either in-house or hire attorneys to make sure they’re doing everything to comply. There’s no added benefit to the consumer and it’s a huge burden.”

McKernan’s background at the FDIC suggests that he will drill down much harder on the cost benefit analysis for industry when setting policy, Idziak said.

“The data that may show that this rule actually benefits consumers without unduly burdening industry. Because that was a lot of his critique over rules when he was a director on the FDIC board — there were sort of just assumptions or pronouncements or statements of fact without any — in his opinion — data to back that up.”