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The CFPB drops its lawsuit against Capital One, marking a major reversal

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The CFPB drops its lawsuit against Capital One, marking a major reversal

Jonathan McKernan, nominee for Director of the Consumer Financial Protection Bureau, testifies before the Senate Banking Committee on Thursday in Washington, D.C.

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Kayla Bartkowski/Getty Images/Getty Images North America

The Consumer Financial Protection Bureau on Thursday dropped five major legal cases it had underway — including a big lawsuit against Capital One — marking a major reversal for an agency that had pursued aggressive action against financial institutions accused of wrongdoing during the Biden administration.

Just last month, the CFPB had accused Capital One of failing to pay more than $2 billion in interest to customers by misleading them into thinking they would be getting higher rates. Capital One denied the charges.

The bureau also dropped its cases against Rocket Homes, Pennsylvania Higher Education Assistance Agency, Vanderbilt Mortgage and Finance, and Heights Finance Holding Company.

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News of the court filings dismissing the CFPB’s legal cases came just as the Senate Banking Committee was grilling President Trump’s nominee to lead the agency, Jonathan McKernan.

The CFPB has faced intense turmoil in recent weeks, with over a hundred workers fired and the agency virtually shuttered after staff were told to stop all work. Employees were locked out of the bureau’s D.C. headquarters and the building’s lease was canceled.

People protest in support of the Consumer Financial Protection Bureau (CFPB) headquarters in Washington, D.C., earlier this month.

People protest in support of the Consumer Financial Protection Bureau (CFPB) headquarters in Washington, D.C., earlier this month.

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During his Senate testimony, McKernan said the agency had overreached under the Biden administration,

“We’ve got to refocus it on its mission,” said McKernan, who was previously on the board of the FDIC. “We need to right-size it, make sure that we have an efficient CFPB and we need to reinstate some accountability to our elected officials.”

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Sen Elizabeth Warren (D-Mass.), who played a major role in the bureau’s founding after the 2008 financial crisis, said during the hearing that she did not believe that the timing of the court filings were coincidental, though she offered no evidence.

“It seems to me the timing of that announcement is designed to embarrass you and to show exactly who is in charge of this agency right now: Elon Musk and his little band of hackers,” she told McKernan.

Sen. Tina Smith (D-Minn.) said that she had asked McKernan about the pending litigation the day before and had been “assured” that he would “review these lawsuits.”

“This makes me question like who’s really going to be in charge of the CFPB if this is what’s happening while your nomination is being considered?,” she said.

“My question is, who’s going to be in charge here?” Smith asked McKernan.

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“Senator, if I’m confirmed, I’m the director,” he replied.

‘CFPB RIP’

The CFPB is currently led by acting director Russell Vought, the White House budget director and one of the architects of the conservative plan Project 2025.

The Trump administration has made clear its contempt for the bureau, and that it wants to either eliminate CFPB or drastically pare back its work. Musk has tweeted “CFPB RIP.”

Consumer groups decried the end of the litigation.

“Voters in the last election expressed their dismay with high prices, yet the Administration is stopping the essential work to stop corporate abuses that take billions from people every year,” said Lauren Saunders, associate director of the National Consumer Law Center. “The cases dismissed today actually underscore why the CFPB’s work is so essential to investigate practices that are draining hard-earned money from the pockets of everyday people.”

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Before joining the FDIC’s Board of Directors, McKernan held staff roles in the Senate, the Treasury, the Federal Housing Finance Agency, and spent a brief stint detailed to CFPB. He previously spent nine years as a lawyer focused on banking and consumer financial laws, according to his prepared testimony. Several business groups have endorsed McKernan’s nomination.

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Not a Deal-Breaker: White House Downplays Iranian Action Near the Strait

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Not a Deal-Breaker: White House Downplays Iranian Action Near the Strait

Just two weeks ago, President Trump threatened to wipe out Iran’s civilization if it did not open the Strait of Hormuz. Days later, he said any Iranian “who fires at us, or at peaceful vessels, will be BLOWN TO HELL!”

Yet on Wednesday, after Iran seized two ships near the Strait of Hormuz, the White House was quick to argue the action was not a deal breaker for potential peace negotiations.

“These were not U.S. ships,” Karoline Leavitt, the White House press secretary, said on Fox News. “These were not Israeli ships.” Therefore, she explained, the Iranians had not violated a cease-fire with the United States that Mr. Trump has extended indefinitely.

She cautioned the news media against “blowing this out of proportion.”

The surprisingly tolerant tone from the White House suggests Mr. Trump is not eager to reignite a war that he started alongside Israel on Feb. 28 — a war that has proved unpopular with Americans and has gone on longer than he initially estimated.

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The president on Tuesday extended a cease-fire between the United States and Iran that had been set to expire within hours, saying he wanted to give Tehran a chance to come up with a new proposal to end the war.

The American military has displayed its overwhelming might during the war, successfully striking thousands of targets. But it remains unclear whether Mr. Trump will accomplish the political objectives of the war.

The Iranian regime, even after its top leaders were killed, is still intact. Iran has not agreed to Mr. Trump’s demands to turn over its nuclear capabilities to the United States or significantly curtail them. And the Strait of Hormuz, a key passageway for world commerce that was open before the war, remains closed.

Nevertheless, the White House has repeatedly highlighted the military successes on the battlefield as evidence it is winning the war.

“We have completely confused and obliterated their regime,” Ms. Leavitt said on Fox Wednesday. “They are in a very weak position thanks to the actions taken by President Trump and our great United States armed forces, and so we will continue this important mission on our own.”

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The oscillation between threats and a more conciliatory tone has long been one of Mr. Trump’s signature negotiating strategies.

Potential peace talks between the two countries are on hold. Vice President JD Vance had been poised to fly to Islamabad for negotiations. But the trip was postponed until Iran can “come up with a unified proposal,” Mr. Trump said.

The United States recently transmitted a written proposal to the Iranians intended to establish base-line points of agreement that could frame more detailed negotiations. The document covers a broad range of issues, but the core sticking points are the same ones that have bedeviled Western negotiators for more than a decade: the scope of Iran’s uranium enrichment program and the fate of its stockpile of enriched uranium.

Mr. Trump has not spoken publicly about the cease-fire, other than on social media. On Wednesday, he also posted about topics including “my Apprentice Juggernaut” — a reference to his former television show; the Virginia elections, which he called “rigged”; and a new book about Supreme Court Justice Samuel A. Alito Jr.

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Pentagon says Navy secretary is leaving, the latest departure of a top defense leader

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Pentagon says Navy secretary is leaving, the latest departure of a top defense leader

Secretary of the Navy John Phelan speaks, as President Trump listens, at Trump’s Mar-a-Lago club on Dec. 22 in Palm Beach, Fla.

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WASHINGTON — Navy Secretary John Phelan is leaving his job, the Pentagon abruptly announced Wednesday, the first head of a military service to depart during President Trump’s second term but just the latest top defense leader to step down or be ousted.

No reason was given for the unexpected departure of the Navy’s top civilian official, coming as the sea service has imposed a blockade of Iranian ports and is targeting ships linked to Tehran around the world during a tenuous ceasefire in the war. Another Trump loyalist is taking over as acting head of the Navy: Undersecretary Hung Cao, a 25-year Navy combat veteran who ran unsuccessful campaigns for the U.S. Senate and House in Virginia.

Phelan’s departure is the latest in a series of shakeups of top leadership at the Pentagon, coming just weeks after Defense Secretary Pete Hegseth fired the Army’s top uniformed officer, Gen. Randy George. Hegseth also has fired several other top generals, admirals and defense leaders since taking office last year.

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The firings began in February 2025, when Hegseth removed military leaders, including Adm. Lisa Franchetti, the Navy’s top uniformed officer, and Gen. Jim Slife, the No. 2 leader at the Air Force. Trump also fired Gen. Charles “CQ” Brown Jr. as chairman of the Joint Chiefs of Staff.

Showing how sudden the latest move was, Phelan had addressed a large crowd of sailors and industry professionals on Tuesday at the Navy’s annual conference in Washington and spoke with reporters about his agenda. He also hosted the leaders of the House Armed Services Committee to discuss the Navy’s budget request and efforts to build more ships, according to a social media post from his office.

Pentagon spokesman Sean Parnell said in a post on X that Phelan was “departing the administration, effective immediately.”

Phelan had been a major Trump donor

Phelan had not served in the military or had a civilian leadership role in the service before Trump nominated him for secretary in late 2024. He was seen as an outsider being brought in to shake up the Navy.

Hung Cao speaks during the Republican National Convention on July 16, 2024, in Milwaukee.

Hung Cao speaks during the Republican National Convention on July 16, 2024, in Milwaukee.

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Phelan was a major donor to Trump’s campaign and had founded the private investment firm Rugger Management LLC. According to his biography, Phelan’s primary exposure to the military came from an advisory position he held on the Spirit of America, a nonprofit that supported the defense of Ukraine and the defense of Taiwan.

The Associated Press could not immediately reach Phelan’s office for comment. The White House did not answer questions and instead responded by sending a link to Parnell’s statement.

Phelan is leaving during a busy time for the Navy. It has three aircraft carriers deployed in or heading to the Middle East, while the Trump administration says all the armed forces are poised to resume combat operations against Iran should the ceasefire expire.

The Navy also has maintained a heavy presence in the Caribbean, where it has been part of a campaign of strikes against alleged drug boats. It also played a major role in the capture of Venezuelan leader Nicolás Maduro in January.

New acting Navy secretary ran unsuccessful bids for Congress

Taking over as acting secretary is Cao, who ran a failed U.S. Senate bid in Virginia to try to unseat Democratic Sen. Tim Kaine in 2024. He had Trump’s endorsement in the crowded Republican primary and gave a speech at the 2024 Republican National Convention.

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Cao’s biography includes fleeing Vietnam with his family as a child in the 1970s. In a campaign video for his Senate bid, he compared Vietnam’s communist regime during the Cold War to the administration of Democratic President Joe Biden.

During his one debate with Kaine, Cao criticized COVID-19 vaccine mandates for service members as well as the military’s diversity, equity and inclusion efforts.

“When you’re using a drag queen to recruit for the Navy, that’s not the people we want,” Cao said from the debate stage. “What we need is alpha males and alpha females who are going to rip out their own guts, eat them and ask for seconds. Those are the young men and women that are going to win wars.”

Trump and Hegseth have railed against DEI in the military, banning the efforts and firing people accused of supporting such programs.

When he ran for Congress in Virginia in 2022, Cao expressed opposition to aid for Ukraine during a debate against his Democratic opponent.

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“My heart goes out to the Ukrainian people. … But right now we’re borrowing $55 billion from China to pay for the war in Ukraine. Not only that, we’re depleting our national strategic reserves,” Cao said.

Cao graduated from the prestigious Thomas Jefferson High School for Science and Technology in Alexandria, Virginia, before attending the U.S. Naval Academy.

He was commissioned as a special operations officer and went on to serve with SEAL teams and special forces in Iraq, Afghanistan and Somalia before retiring at the rank of captain, according to his Senate campaign biography.

Cao also earned a master’s degree in physics and had fellowships at the Massachusetts Institute of Technology and Harvard University.

Since becoming Navy undersecretary, Cao has championed returning to duty service members that refused a Biden-era mandate to take the COVID-19 vaccine.

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California Candidates to Appear in First Major Debate After Swalwell

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California Candidates to Appear in First Major Debate After Swalwell

Candidates in California’s volatile race for governor will meet Wednesday night for the first televised debate since Eric Swalwell dropped out, each looking to seize momentum in the tight contest.

The debate, being held at the television studio of KRON4 in San Francisco, will include four Democrats and two Republicans who are tightly bunched in recent polls, with many voters still undecided less than six weeks before the June 2 primary.

Mr. Swalwell, a Democrat, had just begun to emerge as a Democratic front-runner when his campaign swiftly collapsed after he was accused of sexual assault in news reports on April 10.

Candidates have taken relatively few risks so far in debates around the state, but every candidate is now eyeing a chance to jump to the front of the pack.

“Even though we have seen some movement in the last couple of weeks, it continues to be a fairly crowded, fractured field,” said Sara Sadhwani, an assistant professor of politics at Pomona College. “So candidates need to be able to grab attention in a debate like this.”

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The debate comes as Xavier Becerra, a Democrat and former California attorney general, has enjoyed a surge of support in polls since Mr. Swalwell dropped out of the race.

Mr. Becerra and Matt Mahan, the mayor of San Jose, did not originally meet the threshold to participate in Wednesday’s debate when Mr. Swalwell was running. But they both qualified after receiving enough support in a follow-up poll that debate organizers commissioned once Mr. Swalwell had dropped out.

The other Democrats scheduled to participate are Tom Steyer, a former hedge fund manager, and Katie Porter, a former congresswoman, each of whom have been polling near the top of the Democratic field for several weeks. The Republicans in the debate are Steve Hilton, a former Fox News host who has been endorsed by President Trump, and Chad Bianco, the sheriff of Riverside County.

All candidates run on the same ballot in California’s nonpartisan primary, with the two who receive the most votes advancing to the general election, regardless of their party affiliation. The large number of Democratic candidates has created fear among state party leaders that their voters could splinter, potentially allowing two Republicans to sweep the primary in this heavily Democratic state.

The odds of that happening have decreased since Mr. Swalwell dropped out and another Democrat, Betty Yee, withdrew on Monday. But Rusty Hicks, the chairman of the California Democratic Party, still believes there are too many Democrats in the race and has urged those lagging in polls to end their campaigns. (The actual ballot will include 61 candidates for governor, most of whom are completely unknown to voters.)

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The messy race to succeed Gov. Gavin Newsom, who cannot run for re-election because of term limits, has played out as the most unpredictable contest California has seen in a generation. It has attracted a sprawling field but no one with the star power of former Gov. Arnold Schwarzenegger or the political might of Mr. Newsom or former Gov. Jerry Brown.

Much of California’s Democratic establishment is still figuring out whom to back in the turbulent race.

Mr. Newsom has not endorsed anyone, saying he trusts voters to elect someone “who reflects the values and direction Californians believe in.” Representative Nancy Pelosi, the influential former House speaker from San Francisco, and Senator Alex Padilla also have not announced their favorites. Senator Adam Schiff endorsed Mr. Swalwell earlier this year but quickly withdrew his support after the accusations against him were published.

On Tuesday, Ms. Yee endorsed Mr. Steyer, praising his work to fight climate change and engage young voters. Mr. Steyer has swamped his competitors with a raft of advertising by pouring $134 million from his personal fortune into his campaign.

Also on Tuesday, Mr. Becerra, whose campaign had appeared to be flailing until Mr. Swalwell dropped out, received the endorsement of Robert Rivas, the Democratic speaker of the California State Assembly. Mr. Rivas said he had encouraged Mr. Becerra to run for governor because he was impressed by his work as California’s attorney general during President Trump’s first term.

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“He understands both the policy and the politics,” Mr. Rivas said in an interview. “And he has a track record, in my opinion, of delivering results under pressure.”

The 90-minute debate on Wednesday begins at 7 p.m. PT and will be broadcast and streamed by KRON and other California stations.

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