May 30, 2025 • 26 mins
The regulatory landscape for credit union mortgage lending is undergoing seismic shifts, particularly at the Consumer Financial Protection Bureau. In this revealing policy episode, we explore Jonathan McKernan's unexpected withdrawal from the CFPB director nomination and redirection to Treasury, leaving Russ Vought to continue serving as acting director for potentially another 210 days under the Federal Vacancies Reform Act.
Our conversation with Policy Advisor AnnMarie Conboy-DePasquale of Brownstein Hyatt Farber-Schreck dives deep into the Bureau's recent dramatic pullback of 67 guidance documents, many from the Chopra era but some dating back to the Bureau's inception. This regulatory retreat includes withdrawing compliance bulletins on housing choice vouchers, COVID-era mortgage servicing guidance, and perhaps most significantly, policy statements that had expanded UDAAP interpretations and states' authority to enforce consumer protection laws.
The episode reveals how these changes align with the administration's commitment to eliminate ten regulations for every new one implemented. We also examine potentially massive funding cuts looming on the horizon, with House budget reconciliation proposals potentially slashing the CFPB's funding by approximately 60%, reducing its ability to draw funds from the Federal Reserve.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
The views and opinions expressed in this
podcast do not necessarilyreflect the views or positions
of ACUMA, its board of directors, its management staff or its
members.
The podcast discussionpresented is conversational in
nature and for generalinformation only.
Speaker 2 (00:34):
Hello and welcome to Actions On Point podcast, the
policy series where we focus onpolicy issues impacting the
credit union mortgage industry.
I'm your host, peter Benjamin.
Before we get to our episode,just a quick word from our
sponsor.
Speaker 3 (00:49):
This episode is being brought to you by Loan Vision.
Is your credit union looking toturn your accounting department
into a profit driver?
Loan Vision can help.
Our platform delivers real-timedata, loan-level insights and
automations to streamlineworkflows and improve control
over financial performance.
Transform your cost centersinto revenue generators by
(01:11):
equipping your team with thetools needed to better serve
your members.
And don't miss our monthlywebinar series, where we share
key strategies and bestpractices to help credit unions
optimize their mortgageoperations.
Register today atwwwloanvisioncom under our
upcoming events page.
Speaker 2 (01:30):
Joining us today as our resident expert is
Anne-Marie Conboy, PolicyAdvisor with Brownstein.
Anne, how are you doing today?
Speaker 4 (01:39):
I'm good.
I'm enjoying some lovely springweather here in DC and looking
forward to the Memorial Dayweekend coming up.
Speaker 2 (01:46):
Absolutely Looking forward to it as well.
Now I hope you know our policyand lawmakers are also looking
forward to it, because, I willsay this the Brownstein Weekly
Digest you know both.
You know the normal, you knowhere's what's happening in
(02:08):
Washington, but also thefinancial one.
I will say this they seem to begetting longer and longer as
the weeks go on.
I think last week's wasparticularly long, and so I
don't know if that's a goodthing or a bad thing, but I
think people on the Hill aredefinitely keeping you guys busy
(02:30):
.
So call that job security onone hand, but at the same time,
I'm sure you need a break fromthe madness, so let's hope they
take a break as well.
So let's get back to it.
So what is happening in DC?
That's really important.
(02:51):
I think we have a few things totalk about.
You know the CPP being one ofthe biggest topics.
That's front and center, right.
Speaker 4 (02:59):
Yes, the CPP.
I think it's definitely a goodplace for us to start today.
The CFPB.
I think it's definitely a goodplace for us to start today.
If anyone gets the BrownsteinDigest that Peter is referring
to, you are probably seeing themheadlining a couple stories
(03:20):
every week, and they'redefinitely contributing to the
growing length of thenewsletters.
Congress goes out of session andthings will be a little calmer
around here, at least on thecongressional front.
It's never guaranteed, but itis.
It's a little bit of a light atthe end of the tunnel.
For us, though, it does notslow down the regulators at all.
So you know, even if Congressis out back in the district, the
regulators always like tosurprise us during a recess week
with something, something.
(03:46):
But we know that it won't bethe confirmation of Jonathan
McKernan happening beforeCongress goes out, because his
nomination to be CFPB directorwas withdrawn by the White House
earlier this month.
He is instead going to be theUndersecretary of Domestic
Policy at the TreasuryDepartment, so that puts him
back at square one.
For that nomination He'll needto go through another committee
hearing and a committee votebefore he goes to the floor, and
(04:08):
it also leaves us back atsquare one with a CFPB director.
The White House did not.
Speaker 2 (04:14):
So sorry to interrupt .
No, no, excuse me, Iinterrupted you, but I do have a
question.
So you just said it was theWhite House withdrawing him.
I read one report saying thathe withdrew.
So it was really the WhiteHouse, the.
Speaker 4 (04:29):
White House is the procedural mechanism that
formally withdraws thenomination from Congress,
because the president can say orindicate that he's nominated
someone, but until the WhiteHouse files that nomination with
Congress, with the Senatespecifically, it can't go
anywhere.
So, for example, you hear a lotof names floated as or
(04:50):
indicated as nominees evenbefore a newly elected president
is inaugurated and those peopleare not official nominees until
the president is inauguratedand those names are submitted to
the Senate.
So I'm sure that JonathanMcKernan had conversations with
the White House and hadindicated that he would rather
serve at Treasury in this roleand they came to a mutual
(05:13):
decision that the White Housewould initiate that procedural
mechanism to pull him out of theCFPB slot and nominate him
instead for the Treasury slot.
Speaker 2 (05:22):
Another question on this this was this just a
scenario that it's just takingtoo long and this is just
another path for him to take, orwhat I mean?
What was this?
I mean, you know we've talkedabout this a lot, you know was a
(05:43):
surprise pick, something that Ithink a lot of people were
actually looking forward to himbeing in that spot.
But was this just more of a?
This is just taking too long.
And let's say, it was him thatwithdrew and then backed by the
administration that withdrew andthen backed by the
(06:05):
administration.
Was that his?
I know you you can't be insidehis head, but I mean what?
What was the the, the backingbehind this?
I mean, I don't, I'm just veryintrigued because he seemed like
the right fit for the job.
Speaker 4 (06:18):
I think it was probably a confluence of a
number of factors that led tothe ultimate decision to
withdraw him and re-nominate himfor the other role.
You know, I think what we'veheard a lot downtown is that it
was really difficult to findsomeone who wanted to be
nominated for the CFPB directorpost.
You may recall it took quite awhile for them to even name
(06:39):
McKernan as the nominee.
Back in, you know, december orJanuary we were hearing everyone
else floated and it ultimatelywas McKernan.
And then he proceeded throughcommittee in a I would say,
pretty reasonable timeframe andthen it was a long time where he
was waiting for that final voteon the floor.
He kind of got bumped inprecedence for a number of trade
(06:59):
nominees and national securitynominees that the White House
felt needed to move up thatpriority list, given everything
that was going on with tariffsand I think in the interim it
sounded like McKernan, you know,got got close with some folks
at Treasury who are who aregoing in over there and and
hearing about the regulatoryagenda.
(07:20):
It just seemed like it alignedmore with what he wanted to be
focusing on perhaps than CFPB.
Speaker 2 (07:26):
Okay, thank you for that.
Speaker 4 (07:27):
And given that he hadn't been confirmed yet, it
was fairly easy for the WhiteHouse to just swap someone out.
Speaker 2 (07:33):
Okay, perfect, thank you, all right.
What else?
Speaker 4 (07:38):
And given that they haven't named someone in his
place yet, russ Vought, the OMBdirector, will continue to serve
in that acting capacity.
It doesn't really create anyprocedural urgency on the
administration.
The Federal Vacancies ReformAct governs situations like this
and Vought can stay in thatacting position for another 210
(08:01):
days now that McCurden'snomination has been withdrawn.
So it could be next week thatthe administration picks someone
, or they could decide thatthey're pleased with how Vought
is running the bureau right nowand decide to focus on other
names and come back to this in alittle bit.
Speaker 2 (08:19):
And there was no immediate front runner following
the McKernan stepping downannouncement.
Speaker 4 (08:27):
You know, we've heard that Mark Calabria, who's a
Trump 1.0 veteran, has been overthere at CFPB and in working
with with Vought.
But I don't know if he hasinterest in in pursuing the role
full time or if, as a 1.0 alum,he's just over there for a
shorter term.
So we'll see how that unfolds.
Speaker 2 (08:47):
Interesting.
I mean, didn't he at one pointsay that he wanted the job?
Speaker 4 (08:52):
It's possible.
It's possible.
I'm not sure if it was a formalstatement or anything, or
perhaps something attributed tohim, just more passing, just in
passing, maybe, okay, okay,interesting Again.
Speaker 2 (09:03):
this is all playing out like a soap opera.
It really, it really is okay.
What, anything, anything elseat the cvp?
Actually, that's a dumb, dumbquestion, I'm sorry.
There's a lot, a lot of what?
A lot of what else?
Speaker 4 (09:18):
I think the better question these days at the cfpb
is what else is gone or whatelse has been erased over there.
Speaker 2 (09:25):
What else is not happening on the CFPB Exactly?
Speaker 4 (09:27):
They're very focused on pulling things back right now
.
I think a lot of people wouldagree that during the Biden era
the Chopra CFPB there was a lotof material that went out in the
form of informal guidance orinterpretive rules or blog posts
or whatnot, and the CFPB hasbeen working on pulling a lot of
(09:49):
that back.
Earlier in May they announcedthe withdrawal of 67 various
guidance documents, a lot ofthem from the Biden-era CFPB,
but some of them date back tothe Bureau's inception.
Okay, there's been a big focusunder the current administration
on pulling back 10 regulationsfor every one that they put
(10:12):
forward.
So everything that they pullback helps open up space for
whoever does go in there to moveforward with rules that they
feel would be better fit for theBureau.
A couple of things that theBureau pulled back that I wanted
to mention of the 67.
There was a compliance bulletinon ECOA and Reg B that had to
(10:36):
do with ensuring there's nodiscrimination against mortgage
applicants who are using Section8 housing choice vouchers in
their applications in theirapplications.
Pulling back a bulletin likethat doesn't impact the
underlying regulations at all,but it's just a signal that
that's something theadministration's not interested
in looking at as closely goingforward.
(10:58):
They also pulled back someCOVID-era guidance materials
related to mortgage servicingand that being an oversight
priority for the Bureau.
So that came off the books.
And then, a little bit meatier,from the Chopra era, they pulled
back a policy statement aboutUDAP so unfair, deceptive,
(11:20):
abusive acts or practices I'msure everyone listening to this
podcast is familiar with thatacronym.
But it kind of broadened theCFPB's interpretation of the
scope of that statute and thatwas a big point of contention
under the Chopra regime.
So that's been pulled back, aswas an interpretive rule that
(11:43):
kind of gave the states moreauthority in the CFPB's eyes to
enforce consumer protection law.
And this one the repeal waskind of particularly notable for
me because a few weeks priorthe CFPB had put out a new memo
outlining their enforcementpriorities and one of those was
that the CFPB was going to tryand identify areas where the
(12:08):
states have overlappingjurisdiction with the CFPB and
leaning on states to moveforward with enforcing those
statutes, to take some of theburden off of the CFPB.
And I think at the time therewas some concern because some of
the Chopra era guidance thattakes a more expansive view of
states' powers was still on theCFPB's books.
(12:31):
So I think in pulling some ofthat back the CFPB has better
aligned those two visions of thestates' role.
Speaker 2 (12:39):
Okay, it's fascinating, Very fascinating.
So it's under, we'll say, thecurrent state of the CFPB.
Obviously it's going.
The current state of the CPB.
Obviously it's going tocontinue to evolve.
And I hate to call it astripped-down CPB.
Are you hearing talks of itbeing stripped down even more,
(13:06):
or is this?
Are they kind of sort of atthat point where they have it to
a point where they just want tomaintain it where it is and
kind of carry it forward untilthe new director is in place, or
is it now kind of a?
We're still kind of trying tofigure this thing out.
Speaker 4 (13:33):
It seems like the you know, roosevelt and others in
senior posts were able to firstyou know, in January, february
reduce the staffing to thelevels that they wanted to.
February reduced the staffingto the levels that they wanted
(13:54):
to, and they are now focusedmore on drawing down on the
CFPB's regulatory library,including both formal and
informal pieces of guidance andblog posts and whatnot.
So I think on the personnelfront it seems like they've kind
of checked that box for themost part.
I don't know that in the nearfuture we'll see layoffs as
(14:18):
significant or a reduction inthe size of their staff as
significant as we already have.
I do think on the regulatoryfront we're going to continue
seeing batches of guidance andinterpretive materials pulled
back.
Speaker 2 (14:34):
All right.
So you know, that kind of leadsto the next question, right?
So although, yes, udap caused asignificant debate within the
industry, right, and yes, it hada lot of overlap between fair
(14:55):
lending, ecoa, redlining I meanyou name it right Truth in
lending, I mean there was a lotof overlap that UDAB had right.
I mean there was a lot ofoverlap that UDAB had right.
It wasn't a major change likeTRID or HMDA or really even
(15:19):
ATRQM, right.
I would consider those majorchanges.
Or even LOCOP, right, or evenLO Comp, right.
Are you hinting at or evensaying that those are even on
(15:43):
the table as potential thingsthat could be changed under this
new CFPB or things that they'realso looking at, or is it more?
Speaker 4 (15:48):
of a minor rule, minor regulation, or is
everything fair game?
Minor regulation or iseverything fair game?
I think everything is fair game,but it's important to
distinguish between rulemakingsor pieces of guidance that the
aid the Bureau undertook of itsown volition and the ones that
it was directed to act on byCongress, ones that are
rulemakings that are mandated bystatute.
(16:10):
And anything that's mandated bystatute often it comes with a
deadline for the agency or theBureau to act.
Those deadlines, as we've seenin so many rules, can be blown
past or we can have a rulepromulgated and then revisited
by a new administration, butthey always stick around.
(16:30):
They always are existing insome form and barring an act of
Congress to remove that statutefrom the books.
So those it gets a little morecomplicated if you are wanting
to revise rulemakings directedby statute.
If you are revising orrevisiting pieces of guidance or
(16:51):
rulemakings that were takenbecause the agency decided that
there was a need to take them,it gets a lot easier to find a
reason to go back and revisitthem.
So I think everything's on thetable, but the degree of
complication in revisiting someof these things can vary
significantly.
Speaker 2 (17:11):
Okay, Okay, you know, before we transition.
Is there anything else at theCPB before we look at any other
important tidbits coming out ofDZ?
Speaker 4 (17:21):
Okay, no, I'm sure by the time this airs, something
else will have happened.
Speaker 2 (17:28):
Just another surprise .
Speaker 4 (17:30):
I don't have anything else from inside the Bureau for
today.
Speaker 2 (17:33):
Okay, all right.
So what about the budget?
Speaker 4 (17:37):
So I'll touch first briefly on budget reconciliation
.
Okay, so, just because the kindof House Financial Services
slash Senate banking piece ofthe budget reconciliation puzzle
focuses on the CFPB.
The House has already moved onbudget reconciliation.
They were asked to find about$5 billion in revenue and they
(18:02):
did that by capping the abilityof the CFPB to draw funds from
the Federal Reserve for itsoperating expenses.
The House proposal would dropthat allowance from 12% to 5%.
So we're looking at ultimatelyabout a 60% reduction in funding
for the CFPB annually, shouldthat go forward.
(18:24):
That piece of the puzzle getsbundled into a much larger and
often controversialreconciliation package, the
biggest pieces of whichsignificantly overshadow the
financial services and the House, which should happen, you know,
in the next week or so.
Likely it will then go to theSenate where there is a
(18:56):
something called a birdbaththat's given to the bill Bird
with a Y instead of an I namedfor the senator who came up with
the concept.
But basically it means that inthe Senate when you do a budget
reconciliation bill, everythingin that bill has to have kind of
a budgetary nexus and if it'snon-budgetary it gets pulled out
(19:16):
of the bill.
So I've heard from some peoplewho've asked.
You know, why isn't Congressusing this opportunity to go
farther on CFPB reform insteadof just lowering the Federal
Reserve funding cap?
And it really hinges on thatthe Byrd rule and the pursuant
Byrd bath and the Senate willlook very closely at whether
(19:39):
they can fit anything else intothe bill regarding CFPB.
But ultimately, if it violatesByrd rule, if it's ruled
non-budgetary by the Senate,parliamentarian, that's going to
be the final answer on it.
But this is probably their bestshot at reforming the CFPB's
funding mechanism this year.
Speaker 2 (20:01):
Everything ties back to the CFPB.
Speaker 4 (20:04):
It really does.
It really does.
And then also on budget thoughnot budget reconciliation the
actual kind of annual budget forthe federal government that
call a kind of a skinny budget.
The first version of what willbecome a longer budget from the
(20:25):
White House and the version thatwas released by the White House
on May 2nd, as we expected, hadsome pretty deep cuts to
federal funding in it.
The president's budget is verymuch a marker.
(20:48):
It's a starting point for thisprocess.
It's not usually what the finaldeal looks like.
That piece of course isactually crafted by Congress.
Congress has the power of thepurse.
The appropriations process willhappen kind of simultaneously
in the House and Senate over thenext few months, but typically
the House is a little bit aheadof the Senate.
(21:09):
The president's skinny budget,if you will, suggested a cut for
HUD at about 44% of theircurrent annual budget.
So it would drop the agencyfrom about $77 billion to $44
billion in funding.
So quite a significant cut.
But again, that is very much astarting point.
(21:31):
Funding the government throughthe appropriations process.
The bills have to be there hasto be bipartisan support at the
end of the day to get themacross the finish line, and a
cut like that would certainlynot engender bipartisan support.
But we'll see over the next fewmonths what the bills from the
House and Senate actually looklike.
(21:52):
And again, this is very much astarting point for negotiations,
not a be-all end-all.
Speaker 2 (22:00):
Okay, you know something else that's coming out
of the administration.
Is you know Trump's one bigbeautiful bill administration?
Is you know you know Trump'sone big beautiful bill?
I mean, it didn't pass thefirst time around, I'm guessing
you know some Republicanspivoted the last second.
Do?
Speaker 4 (22:22):
you see it going through after some revisions.
Yeah, so the the one bigbeautiful bill is the
president's name for the budgetreconciliation bill.
Speaker 2 (22:29):
Great great.
Speaker 4 (22:30):
It's.
You know it's catchy.
It is, you know, kind ofironically the acronym is BBB If
you look at big beautiful bill,which was also the acronym for
former President Biden'sreconciliation bill that
ultimately, you know, failed andlater was re-envisioned as the
Inflation Reduction Act.
But this is our second BBB inthe past few years.
(22:51):
But this one, you're right, ithas struggled, particularly on
the tax piece in recent weeks.
It faltered in the House BudgetCommittee last week, failed a
procedural vote there and thenultimately succeeded when the
committee was called back intoorder about 10 o'clock on the
18th Sunday night.
(23:11):
The bill is supposed to movethrough the House Rules
Committee this week.
I think about Wednesday morningis what they're saying right
now.
The main holdout continues to bea need to strike a deal on the
SALT cap, the state and localtax deduction.
The SALT was capped under theTax Cuts and Jobs Act and that
(23:35):
has continued to be acontroversial policy for
particularly House Republicansfrom states with high household
incomes.
So those states typically havemore Democrats hailing from them
.
So we're talking about New York, new Jersey, california, so it
creates an interesting coalitionof bedfellows asking for a deal
(23:59):
on the cap.
I think a factor weighing ontheir willingness to strike a
deal is that the cap expires atthe end of the year.
So negotiating for the cap tostay in place at in the House,
you know, barring any othermajor concerns from, you know,
(24:32):
the Freedom Caucus, which waslooking for deeper cuts, or from
moderates who were concernedwith some of the cuts to
Medicaid, it has really been adifficult task for Republican
leadership to get this throughthe House, just given how tight
the margins are and given someof the policies that made it
into the bill.
Yeah, awesome, but then it stillgoes to the Senate.
(24:53):
So stay tuned for you know,changes in the Senate and for
this, this process, to repeat inthe Senate.
Speaker 2 (24:59):
Okay, before we wrap up, anything else, I think that
was you know.
Speaker 4 (25:04):
That was everything on my list, peter, for the day.
Speaker 2 (25:08):
Okay, perfect, well, am, as always, we appreciate
everything that you do for ourmembers and, of course,
everything that the Brownsteinteam does for Acumen, our
community.
Thank you very much for beinghere.
Speaker 4 (25:22):
Of course.
Of course I did have aWashington DC knock-knock joke
to close out.
I almost forgot DC knock-knockjoke to close out.
Speaker 2 (25:27):
I almost forgot, thank goodness.
Speaker 4 (25:30):
Yes, how many congressmen does it take to
change a light bulb?
Speaker 2 (25:36):
How many?
Speaker 4 (25:38):
Two One to change it and one to change it back.
Speaker 2 (25:46):
That was good.
Speaker 4 (25:48):
And I should say for propriety's sake, the joke works
for senators too.
You could insert your preferredchamber.
Speaker 2 (25:54):
Well done, well done.
I am All right To quickly closeout.
Thank you again to Loan Visionfor sponsoring today's episode
and to all of you.
We know your time is valuable.
Thank you for tuning in to thelatest episode of Acme's On
Point podcast.
We hope you enjoyed it.
Until next time.
Be well, my friends.
Speaker 1 (26:14):
Thanks for listening.
We'll see you next time at theAcuma On Point Podcast.
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The views and opinions expressed in this
podcast do not necessarilyreflect the views or positions
of ACUMA, its board of directors, its management staff or its
members.
The podcast discussionpresented is conversational in
nature and for generalinformation only.
Speaker 2 (00:34):
Hello and welcome to Actions On Point podcast, the
policy series where we focus onpolicy issues impacting the
credit union mortgage industry.
I'm your host, peter Benjamin.
Before we get to our episode,just a quick word from our
sponsor.
Speaker 3 (00:49):
This episode is being brought to you by Loan Vision.
Is your credit union looking toturn your accounting department
into a profit driver?
Loan Vision can help.
Our platform delivers real-timedata, loan-level insights and
automations to streamlineworkflows and improve control
over financial performance.
Transform your cost centersinto revenue generators by
(01:11):
equipping your team with thetools needed to better serve
your members.
And don't miss our monthlywebinar series, where we share
key strategies and bestpractices to help credit unions
optimize their mortgageoperations.
Register today atwwwloanvisioncom under our
upcoming events page.
Speaker 2 (01:30):
Joining us today as our resident expert is
Anne-Marie Conboy, PolicyAdvisor with Brownstein.
Anne, how are you doing today?
Speaker 4 (01:39):
I'm good.
I'm enjoying some lovely springweather here in DC and looking
forward to the Memorial Dayweekend coming up.
Speaker 2 (01:46):
Absolutely Looking forward to it as well.
Now I hope you know our policyand lawmakers are also looking
forward to it, because, I willsay this the Brownstein Weekly
Digest you know both.
You know the normal, you knowhere's what's happening in
(02:08):
Washington, but also thefinancial one.
I will say this they seem to begetting longer and longer as
the weeks go on.
I think last week's wasparticularly long, and so I
don't know if that's a goodthing or a bad thing, but I
think people on the Hill aredefinitely keeping you guys busy
(02:30):
.
So call that job security onone hand, but at the same time,
I'm sure you need a break fromthe madness, so let's hope they
take a break as well.
So let's get back to it.
So what is happening in DC?
That's really important.
(02:51):
I think we have a few things totalk about.
You know the CPP being one ofthe biggest topics.
That's front and center, right.
Speaker 4 (02:59):
Yes, the CPP.
I think it's definitely a goodplace for us to start today.
The CFPB.
I think it's definitely a goodplace for us to start today.
If anyone gets the BrownsteinDigest that Peter is referring
to, you are probably seeing themheadlining a couple stories
(03:20):
every week, and they'redefinitely contributing to the
growing length of thenewsletters.
Congress goes out of session andthings will be a little calmer
around here, at least on thecongressional front.
It's never guaranteed, but itis.
It's a little bit of a light atthe end of the tunnel.
For us, though, it does notslow down the regulators at all.
So you know, even if Congressis out back in the district, the
regulators always like tosurprise us during a recess week
with something, something.
(03:46):
But we know that it won't bethe confirmation of Jonathan
McKernan happening beforeCongress goes out, because his
nomination to be CFPB directorwas withdrawn by the White House
earlier this month.
He is instead going to be theUndersecretary of Domestic
Policy at the TreasuryDepartment, so that puts him
back at square one.
For that nomination He'll needto go through another committee
hearing and a committee votebefore he goes to the floor, and
(04:08):
it also leaves us back atsquare one with a CFPB director.
The White House did not.
Speaker 2 (04:14):
So sorry to interrupt .
No, no, excuse me, Iinterrupted you, but I do have a
question.
So you just said it was theWhite House withdrawing him.
I read one report saying thathe withdrew.
So it was really the WhiteHouse, the.
Speaker 4 (04:29):
White House is the procedural mechanism that
formally withdraws thenomination from Congress,
because the president can say orindicate that he's nominated
someone, but until the WhiteHouse files that nomination with
Congress, with the Senatespecifically, it can't go
anywhere.
So, for example, you hear a lotof names floated as or
(04:50):
indicated as nominees evenbefore a newly elected president
is inaugurated and those peopleare not official nominees until
the president is inauguratedand those names are submitted to
the Senate.
So I'm sure that JonathanMcKernan had conversations with
the White House and hadindicated that he would rather
serve at Treasury in this roleand they came to a mutual
(05:13):
decision that the White Housewould initiate that procedural
mechanism to pull him out of theCFPB slot and nominate him
instead for the Treasury slot.
Speaker 2 (05:22):
Another question on this this was this just a
scenario that it's just takingtoo long and this is just
another path for him to take, orwhat I mean?
What was this?
I mean, you know we've talkedabout this a lot, you know was a
(05:43):
surprise pick, something that Ithink a lot of people were
actually looking forward to himbeing in that spot.
But was this just more of a?
This is just taking too long.
And let's say, it was him thatwithdrew and then backed by the
administration that withdrew andthen backed by the
(06:05):
administration.
Was that his?
I know you you can't be insidehis head, but I mean what?
What was the the, the backingbehind this?
I mean, I don't, I'm just veryintrigued because he seemed like
the right fit for the job.
Speaker 4 (06:18):
I think it was probably a confluence of a
number of factors that led tothe ultimate decision to
withdraw him and re-nominate himfor the other role.
You know, I think what we'veheard a lot downtown is that it
was really difficult to findsomeone who wanted to be
nominated for the CFPB directorpost.
You may recall it took quite awhile for them to even name
(06:39):
McKernan as the nominee.
Back in, you know, december orJanuary we were hearing everyone
else floated and it ultimatelywas McKernan.
And then he proceeded throughcommittee in a I would say,
pretty reasonable timeframe andthen it was a long time where he
was waiting for that final voteon the floor.
He kind of got bumped inprecedence for a number of trade
(06:59):
nominees and national securitynominees that the White House
felt needed to move up thatpriority list, given everything
that was going on with tariffsand I think in the interim it
sounded like McKernan, you know,got got close with some folks
at Treasury who are who aregoing in over there and and
hearing about the regulatoryagenda.
(07:20):
It just seemed like it alignedmore with what he wanted to be
focusing on perhaps than CFPB.
Speaker 2 (07:26):
Okay, thank you for that.
Speaker 4 (07:27):
And given that he hadn't been confirmed yet, it
was fairly easy for the WhiteHouse to just swap someone out.
Speaker 2 (07:33):
Okay, perfect, thank you, all right.
What else?
Speaker 4 (07:38):
And given that they haven't named someone in his
place yet, russ Vought, the OMBdirector, will continue to serve
in that acting capacity.
It doesn't really create anyprocedural urgency on the
administration.
The Federal Vacancies ReformAct governs situations like this
and Vought can stay in thatacting position for another 210
(08:01):
days now that McCurden'snomination has been withdrawn.
So it could be next week thatthe administration picks someone
, or they could decide thatthey're pleased with how Vought
is running the bureau right nowand decide to focus on other
names and come back to this in alittle bit.
Speaker 2 (08:19):
And there was no immediate front runner following
the McKernan stepping downannouncement.
Speaker 4 (08:27):
You know, we've heard that Mark Calabria, who's a
Trump 1.0 veteran, has been overthere at CFPB and in working
with with Vought.
But I don't know if he hasinterest in in pursuing the role
full time or if, as a 1.0 alum,he's just over there for a
shorter term.
So we'll see how that unfolds.
Speaker 2 (08:47):
Interesting.
I mean, didn't he at one pointsay that he wanted the job?
Speaker 4 (08:52):
It's possible.
It's possible.
I'm not sure if it was a formalstatement or anything, or
perhaps something attributed tohim, just more passing, just in
passing, maybe, okay, okay,interesting Again.
Speaker 2 (09:03):
this is all playing out like a soap opera.
It really, it really is okay.
What, anything, anything elseat the cvp?
Actually, that's a dumb, dumbquestion, I'm sorry.
There's a lot, a lot of what?
A lot of what else?
Speaker 4 (09:18):
I think the better question these days at the cfpb
is what else is gone or whatelse has been erased over there.
Speaker 2 (09:25):
What else is not happening on the CFPB Exactly?
Speaker 4 (09:27):
They're very focused on pulling things back right now
.
I think a lot of people wouldagree that during the Biden era
the Chopra CFPB there was a lotof material that went out in the
form of informal guidance orinterpretive rules or blog posts
or whatnot, and the CFPB hasbeen working on pulling a lot of
(09:49):
that back.
Earlier in May they announcedthe withdrawal of 67 various
guidance documents, a lot ofthem from the Biden-era CFPB,
but some of them date back tothe Bureau's inception.
Okay, there's been a big focusunder the current administration
on pulling back 10 regulationsfor every one that they put
(10:12):
forward.
So everything that they pullback helps open up space for
whoever does go in there to moveforward with rules that they
feel would be better fit for theBureau.
A couple of things that theBureau pulled back that I wanted
to mention of the 67.
There was a compliance bulletinon ECOA and Reg B that had to
(10:36):
do with ensuring there's nodiscrimination against mortgage
applicants who are using Section8 housing choice vouchers in
their applications in theirapplications.
Pulling back a bulletin likethat doesn't impact the
underlying regulations at all,but it's just a signal that
that's something theadministration's not interested
in looking at as closely goingforward.
(10:58):
They also pulled back someCOVID-era guidance materials
related to mortgage servicingand that being an oversight
priority for the Bureau.
So that came off the books.
And then, a little bit meatier,from the Chopra era, they pulled
back a policy statement aboutUDAP so unfair, deceptive,
(11:20):
abusive acts or practices I'msure everyone listening to this
podcast is familiar with thatacronym.
But it kind of broadened theCFPB's interpretation of the
scope of that statute and thatwas a big point of contention
under the Chopra regime.
So that's been pulled back, aswas an interpretive rule that
(11:43):
kind of gave the states moreauthority in the CFPB's eyes to
enforce consumer protection law.
And this one the repeal waskind of particularly notable for
me because a few weeks priorthe CFPB had put out a new memo
outlining their enforcementpriorities and one of those was
that the CFPB was going to tryand identify areas where the
(12:08):
states have overlappingjurisdiction with the CFPB and
leaning on states to moveforward with enforcing those
statutes, to take some of theburden off of the CFPB.
And I think at the time therewas some concern because some of
the Chopra era guidance thattakes a more expansive view of
states' powers was still on theCFPB's books.
(12:31):
So I think in pulling some ofthat back the CFPB has better
aligned those two visions of thestates' role.
Speaker 2 (12:39):
Okay, it's fascinating, Very fascinating.
So it's under, we'll say, thecurrent state of the CFPB.
Obviously it's going.
The current state of the CPB.
Obviously it's going tocontinue to evolve.
And I hate to call it astripped-down CPB.
Are you hearing talks of itbeing stripped down even more,
(13:06):
or is this?
Are they kind of sort of atthat point where they have it to
a point where they just want tomaintain it where it is and
kind of carry it forward untilthe new director is in place, or
is it now kind of a?
We're still kind of trying tofigure this thing out.
Speaker 4 (13:33):
It seems like the you know, roosevelt and others in
senior posts were able to firstyou know, in January, february
reduce the staffing to thelevels that they wanted to.
February reduced the staffingto the levels that they wanted
(13:54):
to, and they are now focusedmore on drawing down on the
CFPB's regulatory library,including both formal and
informal pieces of guidance andblog posts and whatnot.
So I think on the personnelfront it seems like they've kind
of checked that box for themost part.
I don't know that in the nearfuture we'll see layoffs as
(14:18):
significant or a reduction inthe size of their staff as
significant as we already have.
I do think on the regulatoryfront we're going to continue
seeing batches of guidance andinterpretive materials pulled
back.
Speaker 2 (14:34):
All right.
So you know, that kind of leadsto the next question, right?
So although, yes, udap caused asignificant debate within the
industry, right, and yes, it hada lot of overlap between fair
(14:55):
lending, ecoa, redlining I meanyou name it right Truth in
lending, I mean there was a lotof overlap that UDAB had right.
I mean there was a lot ofoverlap that UDAB had right.
It wasn't a major change likeTRID or HMDA or really even
(15:19):
ATRQM, right.
I would consider those majorchanges.
Or even LOCOP, right, or evenLO Comp, right.
Are you hinting at or evensaying that those are even on
(15:43):
the table as potential thingsthat could be changed under this
new CFPB or things that they'realso looking at, or is it more?
Speaker 4 (15:48):
of a minor rule, minor regulation, or is
everything fair game?
Minor regulation or iseverything fair game?
I think everything is fair game,but it's important to
distinguish between rulemakingsor pieces of guidance that the
aid the Bureau undertook of itsown volition and the ones that
it was directed to act on byCongress, ones that are
rulemakings that are mandated bystatute.
(16:10):
And anything that's mandated bystatute often it comes with a
deadline for the agency or theBureau to act.
Those deadlines, as we've seenin so many rules, can be blown
past or we can have a rulepromulgated and then revisited
by a new administration, butthey always stick around.
(16:30):
They always are existing insome form and barring an act of
Congress to remove that statutefrom the books.
So those it gets a little morecomplicated if you are wanting
to revise rulemakings directedby statute.
If you are revising orrevisiting pieces of guidance or
(16:51):
rulemakings that were takenbecause the agency decided that
there was a need to take them,it gets a lot easier to find a
reason to go back and revisitthem.
So I think everything's on thetable, but the degree of
complication in revisiting someof these things can vary
significantly.
Speaker 2 (17:11):
Okay, Okay, you know, before we transition.
Is there anything else at theCPB before we look at any other
important tidbits coming out ofDZ?
Speaker 4 (17:21):
Okay, no, I'm sure by the time this airs, something
else will have happened.
Speaker 2 (17:28):
Just another surprise .
Speaker 4 (17:30):
I don't have anything else from inside the Bureau for
today.
Speaker 2 (17:33):
Okay, all right.
So what about the budget?
Speaker 4 (17:37):
So I'll touch first briefly on budget reconciliation
.
Okay, so, just because the kindof House Financial Services
slash Senate banking piece ofthe budget reconciliation puzzle
focuses on the CFPB.
The House has already moved onbudget reconciliation.
They were asked to find about$5 billion in revenue and they
(18:02):
did that by capping the abilityof the CFPB to draw funds from
the Federal Reserve for itsoperating expenses.
The House proposal would dropthat allowance from 12% to 5%.
So we're looking at ultimatelyabout a 60% reduction in funding
for the CFPB annually, shouldthat go forward.
(18:24):
That piece of the puzzle getsbundled into a much larger and
often controversialreconciliation package, the
biggest pieces of whichsignificantly overshadow the
financial services and the House, which should happen, you know,
in the next week or so.
Likely it will then go to theSenate where there is a
(18:56):
something called a birdbaththat's given to the bill Bird
with a Y instead of an I namedfor the senator who came up with
the concept.
But basically it means that inthe Senate when you do a budget
reconciliation bill, everythingin that bill has to have kind of
a budgetary nexus and if it'snon-budgetary it gets pulled out
(19:16):
of the bill.
So I've heard from some peoplewho've asked.
You know, why isn't Congressusing this opportunity to go
farther on CFPB reform insteadof just lowering the Federal
Reserve funding cap?
And it really hinges on thatthe Byrd rule and the pursuant
Byrd bath and the Senate willlook very closely at whether
(19:39):
they can fit anything else intothe bill regarding CFPB.
But ultimately, if it violatesByrd rule, if it's ruled
non-budgetary by the Senate,parliamentarian, that's going to
be the final answer on it.
But this is probably their bestshot at reforming the CFPB's
funding mechanism this year.
Speaker 2 (20:01):
Everything ties back to the CFPB.
Speaker 4 (20:04):
It really does.
It really does.
And then also on budget thoughnot budget reconciliation the
actual kind of annual budget forthe federal government that
call a kind of a skinny budget.
The first version of what willbecome a longer budget from the
(20:25):
White House and the version thatwas released by the White House
on May 2nd, as we expected, hadsome pretty deep cuts to
federal funding in it.
The president's budget is verymuch a marker.
(20:48):
It's a starting point for thisprocess.
It's not usually what the finaldeal looks like.
That piece of course isactually crafted by Congress.
Congress has the power of thepurse.
The appropriations process willhappen kind of simultaneously
in the House and Senate over thenext few months, but typically
the House is a little bit aheadof the Senate.
(21:09):
The president's skinny budget,if you will, suggested a cut for
HUD at about 44% of theircurrent annual budget.
So it would drop the agencyfrom about $77 billion to $44
billion in funding.
So quite a significant cut.
But again, that is very much astarting point.
(21:31):
Funding the government throughthe appropriations process.
The bills have to be there hasto be bipartisan support at the
end of the day to get themacross the finish line, and a
cut like that would certainlynot engender bipartisan support.
But we'll see over the next fewmonths what the bills from the
House and Senate actually looklike.
(21:52):
And again, this is very much astarting point for negotiations,
not a be-all end-all.
Speaker 2 (22:00):
Okay, you know something else that's coming out
of the administration.
Is you know Trump's one bigbeautiful bill administration?
Is you know you know Trump'sone big beautiful bill?
I mean, it didn't pass thefirst time around, I'm guessing
you know some Republicanspivoted the last second.
Do?
Speaker 4 (22:22):
you see it going through after some revisions.
Yeah, so the the one bigbeautiful bill is the
president's name for the budgetreconciliation bill.
Speaker 2 (22:29):
Great great.
Speaker 4 (22:30):
It's.
You know it's catchy.
It is, you know, kind ofironically the acronym is BBB If
you look at big beautiful bill,which was also the acronym for
former President Biden'sreconciliation bill that
ultimately, you know, failed andlater was re-envisioned as the
Inflation Reduction Act.
But this is our second BBB inthe past few years.
(22:51):
But this one, you're right, ithas struggled, particularly on
the tax piece in recent weeks.
It faltered in the House BudgetCommittee last week, failed a
procedural vote there and thenultimately succeeded when the
committee was called back intoorder about 10 o'clock on the
18th Sunday night.
(23:11):
The bill is supposed to movethrough the House Rules
Committee this week.
I think about Wednesday morningis what they're saying right
now.
The main holdout continues to bea need to strike a deal on the
SALT cap, the state and localtax deduction.
The SALT was capped under theTax Cuts and Jobs Act and that
(23:35):
has continued to be acontroversial policy for
particularly House Republicansfrom states with high household
incomes.
So those states typically havemore Democrats hailing from them
.
So we're talking about New York, new Jersey, california, so it
creates an interesting coalitionof bedfellows asking for a deal
(23:59):
on the cap.
I think a factor weighing ontheir willingness to strike a
deal is that the cap expires atthe end of the year.
So negotiating for the cap tostay in place at in the House,
you know, barring any othermajor concerns from, you know,
(24:32):
the Freedom Caucus, which waslooking for deeper cuts, or from
moderates who were concernedwith some of the cuts to
Medicaid, it has really been adifficult task for Republican
leadership to get this throughthe House, just given how tight
the margins are and given someof the policies that made it
into the bill.
Yeah, awesome, but then it stillgoes to the Senate.
(24:53):
So stay tuned for you know,changes in the Senate and for
this, this process, to repeat inthe Senate.
Speaker 2 (24:59):
Okay, before we wrap up, anything else, I think that
was you know.
Speaker 4 (25:04):
That was everything on my list, peter, for the day.
Speaker 2 (25:08):
Okay, perfect, well, am, as always, we appreciate
everything that you do for ourmembers and, of course,
everything that the Brownsteinteam does for Acumen, our
community.
Thank you very much for beinghere.
Speaker 4 (25:22):
Of course.
Of course I did have aWashington DC knock-knock joke
to close out.
I almost forgot DC knock-knockjoke to close out.
Speaker 2 (25:27):
I almost forgot, thank goodness.
Speaker 4 (25:30):
Yes, how many congressmen does it take to
change a light bulb?
Speaker 2 (25:36):
How many?
Speaker 4 (25:38):
Two One to change it and one to change it back.
Speaker 2 (25:46):
That was good.
Speaker 4 (25:48):
And I should say for propriety's sake, the joke works
for senators too.
You could insert your preferredchamber.
Speaker 2 (25:54):
Well done, well done.
I am All right To quickly closeout.
Thank you again to Loan Visionfor sponsoring today's episode
and to all of you.
We know your time is valuable.
Thank you for tuning in to thelatest episode of Acme's On
Point podcast.
We hope you enjoyed it.
Until next time.
Be well, my friends.
Speaker 1 (26:14):
Thanks for listening.
We'll see you next time at theAcuma On Point Podcast.
If not already, be sure tosubscribe and give us a
five-star rating For more greatepisodes and information.
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