Reduced size of CFPB is 'advantageous,' claims Senate banking leader
Sen. Tim Scott, the Republican Senator from South Carolina and Chair of the Senate Banking Committee, shared his views on several key financial regulatory issues during the American Bankers Association's (ABA) Washington summit.
In a notable development, Sen. Scott projected a full Senate vote on Jonathan McKernan's nomination to lead the Consumer Financial Protection Bureau (CFPB) in early May. However, as of mid-August 2025, a specific date for this vote has not been announced. McKernan was initially nominated by the Trump administration early in 2025 to be CFPB Director, but his nomination was later withdrawn from that role and moved to a senior Treasury Department position, where he was approved by committee in a narrow 14-13 vote on July 31, 2025.
The CFPB remains without a Senate-confirmed permanent director, operating under acting directors such as Russell Vought, due to the nomination shift and confirmation delays. Sen. Scott expressed hope that the nomination of Michelle Bowman for the vice chair for supervision role at the Federal Reserve would also lead to the Fed moving away from using reputational risk.
Sen. Scott has also introduced legislation aimed at eliminating reputational risk as a metric regulators would use to gauge the safety and soundness of banks. He sees a good chance of getting bipartisan support for this legislation. The Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp. have both moved away from using reputational risk.
Sen. Scott is working closely with House Financial Services Committee Chair French Hill, R-AR, both pushing back on the CFPB's regulatory agenda and crafting a legislative agenda. Their efforts have been prompted by disagreements with Sen. Elizabeth Warren, the Democratic Senator from Massachusetts, who chairs the Senate Banking Subcommittee on Financial Institutions and Consumer Protection.
Despite their differences, Sen. Scott finds Sen. Warren "strong, smart," and "engaging." He believes that their disagreements have prompted Republicans on the panel to be stronger and more committed. The working relationship between Sen. Scott and Sen. Warren requires everyone to show up for votes, as demonstrated by the recent vote last month to advance McKernan's nomination as CFPB director by the Senate Banking Committee.
The CFPB attempted to let go of approximately 1,175 employees, but a federal judge granted a preliminary injunction that halted the bureau from issuing any reductions in force. The CFPB now employs about 1,700 staffers.
[1] CFPB Director Nominee McKernan Clears Senate Panel, but Confirmation Process Stalls [2] No New Fact about Purchasing Licensing Rights [3] CFPB Acting Director Issues Stop-Work Order, Attempts to Gut Workforce [4] McKernan Testifies before Senate Committees about CFPB [5] CFPB Nominee McKernan's Approval for Treasury Department Role Approved by Committee in Narrow Vote
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