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Contributed commentary by Charlie Koon with the Tennessee Bankers Association:

Jan. 20, 2025, brought a new day in Washington, D.C., as President Donald Trump was sworn in for a second term. If his initial actions are any indication, change to the government bureaucracy is certain. The optimism within the banking industry for the opportunities in the next four years is as strong as I’ve ever seen.

President Trump has already issued a regulatory freeze and is working to overturn several harmful regulations for the banking industry that were enacted under the Biden Administration. One place that needs the most reform is the Consumer Financial Protection Bureau (CFPB).

Following the victory of President Trump in November, most agencies moved to slow down their regulatory processes, recognizing that the Trump administration was who voters wanted leading the country. The CFPB took a different approach and ramped up regulatory efforts even further leading up to Inauguration Day.

But needed reform is coming. Trump fired Director Rohit Chopra on Feb. 1. He then named Russ Vought as acting director for just long enough to shutter the bureau – closing the offices for a week, directing employees not to issue new rules and stop pending investigations and, perhaps most telling, shutting down the bureau’s unlimited funding from the Federal Reserve.

Perhaps that was Trump’s first step in his plan to dismantle the CFPB – send in Vought to cease all activities and then nominate a director to piece it back together. Just days after Vought turned off the lights, Jonathan McKernan, a former FDIC director and former policy advisor for former Tennessee Sen. Bob Corker, was nominated to run the bureau.

Having spent time with McKernan in D.C. while on trips with the Tennessee Bankers Association, it’s obvious he is the right person for this monumental task. I have no doubt that once confirmed, he will quickly and effectively do what he was tasked to do: restore accountability, review every rule over the last four years and repeal those that unnecessarily burden banks and ultimately hurt small businesses and consumers.

The CFPB’s unchecked power has led to a weaponization of government that was seemingly more focused on generating partisan goals than protecting consumers. I look forward to watching the CFPB evolve back into what it was intended to be – an agency to educate consumers about their financial choices – under McKernan’s leadership.

My hope is that the CFPB abandons its practice of regulating financial institutions through enforcement action and instead moves to providing clear rules of the road that are reasonable and balanced. It must also go back to acting within its statutory authority. The agency overregulated nearly every facet of the financial system and operated well beyond its Congressional mandate. When Congress created the CFPB, it never intended for the agency to have such broad regulatory powers over our entire financial economy.

While the CFPB portrayed its behavior as holding financial institutions accountable on behalf of consumers, that could not be farther from the truth. They targeted financial institutions at the expense of consumers and small businesses.

Just ask any banker you know. Overregulation from agencies like the CFPB always ends up harming consumers. If you overregulate, meaning “over protect” consumers through new rules, you limit what the services and credit financial institutions can offer them. And reducing service options is never a good thing.

For most of my career, I have worked in community banking, including currently at Legends Bank in Clarksville. I am also fortunate enough to chair the Government Relations Committee at the Tennessee Bankers Association. I recognize the importance of banks being able to best serve their community, and the recent CFPB regulatory stranglehold has made that more challenging with each passing day.

But that’s not to say no regulation is a good thing, either. Balanced regulation is what we need, and what I know McKernan can achieve.

It is time for a reset at the CFPB. The agency’s path of overreach and overregulation did more harm than good, and accountability is needed.

President Trump and Congress must act swiftly to confirm McKernan and rein in the agency’s excesses, bringing common sense and accountability back to consumer protection.

Charlie Koon is senior vice president of Business & Community/Military Development manager at Legends Bank, and chair of the Government Relations Committee and board member at the Tennessee Bankers Association.