By Douglas Gillison and Pete Schroeder
WASHINGTON (Reuters) – President Donald Trump’s pick to oversee a consumer watchdog is due to face a grilling from Democrats in the U.S. Senate on Thursday as the White House presses ahead with aggressive efforts to dismantle the agency.
Jonathan McKernan, nominated to lead the Consumer Financial Protection Bureau, will testify before the Senate Banking Committee on his selection.
There, he will face off against Senator Elizabeth Warren, the top Democrat on the panel who also helped establish the watchdog after its creation in 2010.
Thursday’s hearing will mark the first time Democrats, incensed at the dismantling of an agency they view as a critical safeguard for consumers using financial products, will be able to directly press a Republican official on the future of the agency.
Under the acting leadership of Office of Management and Budget Director Russ Vought, the CFPB has been effectively shuttered, with the agency’s doors locked and most staff placed on administrative leave.
Signs on the agency’s headquarters next to the White House have been removed, and its lease is being canceled in a bid to create a more “streamlined” agency, according to court filings. The agency has also begun dropping lawsuits it had filed against financial firms under previous leadership.
Republicans and industrial lobbies have long reviled and even sought to abolish the CFPB, which they describe as a politically unaccountable burden to free enterprise improperly shielded from lawmakers’ oversight.
McKernan, who previously served as a commissioner on the Federal Deposit Insurance Corporation, a bank regulator, echoed those complaints in prepared testimony, describing it as operating in a “politicized manner” and overstepping its authority.
“It’s clear that the CFPB suffers from a crisis of legitimacy. This must be corrected if the CFPB is to reliably do what it’s supposed to do—look out for the American consumer,” he said in prepared testimony posted by the committee.
McKernan added he would “fully and faithfully” execute consumer financial protection laws if confirmed, while vowing to end “past excesses.”
Thursday’s hearing is a critical first test for McKernan, as his ability to gain approval in the narrowly split committee could clear the way for his ultimate confirmation by the full Senate.
In a letter sent to McKernan Tuesday, Warren provided a lengthy list of questions, including whether he agreed with Trump’s prior remarks he wanted to “get rid of” the agency, and how much staff he would need to fulfill the legal obligations of the agency to monitor and enforce consumer protection laws.
“At your nomination hearing…you must demonstrate…that you are willing and able to advocate for consumers, the CFPB, and the robust enforcement of consumer protection law,” she wrote.
Alongside McKernan, the panel will also consider the nomination of Bill Pulte, a private equity executive Trump nominated to lead the Federal Housing Finance Agency. That regulator oversees mortgage giants Fannie Mae and Freddie Mac, which guarantee most of the nation’s mortgages but have remained under a government conservatorship since the 2008 subprime mortgage crisis.
Freeing the government-sponsored enterprises from government control is expected to be a priority for the Trump administration, and Pulte is likely to be pressed on his plans in that regard.
In his prepared testimony, Pulte said the conservatorships should not be indefinite, but the pair’s exit from government backing must be “carefully planned.”
The panel will also include a pair of economic nominees: Stephen Miran, who is picked to serve as chair of Trump’s Council of Economic Advisers, and Jeffrey Kessler, who would be under secretary for industry and security at the Commerce Department.
(Reporting by Pete Schroeder; Editing by Alistair Bell)
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