TreasuryGSE ReformFanniegate

Jonathan McKernan

Under Secretary of Domestic Finance at the U.S. Department of the Treasury. The office that oversees the Preferred Stock Purchase Agreements with Fannie Mae and Freddie Mac. The gatekeeper for conservatorship exit.

Confirmed 51-47Former FDIC Board Member

The Lawyer Who Circled the GSE Question for a Decade

Jonathan McKernan's career is a masterclass in institutional knowledge accumulation. Ten years as a banking lawyer at WilmerHale and Hogan Lovells. Then Senator Corker's office, advising on housing finance reform. Then Treasury, where he helped develop the 2019 Housing Reform Plan — the Trump administration's first blueprint for ending the Fannie and Freddie conservatorship. Then the FHFA, sitting inside the agency that conserves the GSEs. Then the Senate Banking Committee as counsel to Senator Toomey. Then the FDIC Board, where he built a reputation for principled dissents.

Every stop gave him a different angle on the same problem. Private practice taught him how regulation affects institutions. The Senate taught him how policy gets written. Treasury taught him how the PSPAs work. FHFA taught him how conservatorship operates from the inside. The FDIC taught him how bank regulation and systemic risk intersect. No one currently serving in government has a more complete understanding of the housing finance architecture.

When Trump initially nominated him to lead the CFPB, it was a mismatch — McKernan's expertise is housing finance and bank regulation, not consumer protection. Secretary Bessent recognized this and redirected him to Under Secretary of Domestic Finance, the role that actually controls Treasury's relationship with Fannie Mae and Freddie Mac through the PSPAs. The right person found the right chair.

Career Timeline

Education

B.A. & M.A. in Economics (Summa Cum Laude)

University of Tennessee

Economics at Tennessee — undergrad and master's, graduating summa cum laude. Not a coastal Ivy pedigree, but the kind of rigorous quantitative foundation that shows up later when you're dissecting Basel III capital frameworks and PSPA amendment mechanics. The economics training is the throughline of everything that follows.

Education

J.D. with High Honors

Duke University School of Law

Law degree with High Honors from Duke. This is where economics meets regulatory architecture. McKernan didn't just study finance — he learned how financial regulation is constructed, interpreted, and litigated. That dual fluency in economics and law becomes his signature advantage.

2007 - 2017

Banking & Consumer Finance Attorney

WilmerHale / Hogan Lovells

A decade in private practice at two of the most prestigious law firms in Washington — Wilmer Cutler Pickering Hale and Dorr (WilmerHale) and Hogan Lovells. Specialized in banking and consumer financial law. Ten years advising banks on the same regulatory frameworks he would later help write and enforce. When you've spent a decade on the private side, you understand what regulation actually does to institutions — not just what it's supposed to do.

2017 - 2018

Senior Financial Policy Advisor

Office of Senator Bob Corker (R-TN)

Senior advisor to Senator Corker on housing finance reform and financial services policy. Corker was chairman of the Senate Foreign Relations Committee and a key voice on housing finance — he co-authored the Corker-Warner bill, one of the most serious legislative attempts at GSE reform. McKernan was advising on these exact issues.

2018 - 2019

Senior Policy Advisor

U.S. Department of the Treasury

McKernan's first stint at Treasury — as a senior policy advisor. He played a pivotal role in developing the Treasury Housing Reform Plan released in September 2019, the Trump administration's blueprint for ending the Fannie and Freddie conservatorship. This is where he first got his hands on the PSPA mechanics and GSE policy architecture.

2019 - 2021

Senior Counsel for Policy

Federal Housing Finance Agency (FHFA)

Senior Counsel at the FHFA — the agency that directly regulates and conserves Fannie Mae and Freddie Mac. FHFA is the conservator. Treasury holds the PSPAs. McKernan sat at the nexus of both. He came to FHFA from Treasury, bringing direct knowledge of the housing reform plan he helped develop.

2021 - 2022

Counsel to Ranking Member Pat Toomey

Senate Committee on Banking, Housing, and Urban Affairs

Counsel to Senator Toomey on the Banking Committee — the committee with jurisdiction over financial regulation, housing policy, and the GSEs. Toomey was the ranking Republican member, and McKernan was his counsel on financial regulatory matters. Another angle on the same policy ecosystem.

January 2023 - February 2025

Member, Board of Directors

Federal Deposit Insurance Corporation (FDIC)

Nominated by President Biden as the Republican minority member of the FDIC Board. Sworn in January 5, 2023. Became known for principled dissents — opposing the Basel III endgame capital proposal, pushing back on bank merger governance rules, and calling out moral hazard after the SVB and Signature Bank bailouts. Co-chaired the special committee overseeing the independent review of FDIC workplace culture. Resigned February 10, 2025.

February 2025

Nominated as CFPB Director

White House

President Trump initially nominates McKernan to lead the Consumer Financial Protection Bureau. But his skill set is too valuable for that role. Secretary Bessent and the Treasury team recognize what they have — a banking lawyer with FHFA, Treasury, Senate Banking, and FDIC experience. The CFPB nomination is withdrawn in May 2025.

May 2025

Nominated as Under Secretary of Domestic Finance

White House / U.S. Department of the Treasury

The pivot. Trump withdraws the CFPB nomination and instead nominates McKernan for Under Secretary of Domestic Finance at Treasury — a far more consequential role for the GSE question. This is the office that oversees the Preferred Stock Purchase Agreements with Fannie Mae and Freddie Mac. This is where conservatorship exit gets decided.

October 7, 2025

Confirmed by the U.S. Senate, 51-47

U.S. Senate

The Senate confirms McKernan on a party-line vote, 51-47. No Democrats cross the aisle — a contrast with Pettit's 69-30 bipartisan confirmation. The vote reflects the polarized politics around financial regulation, not McKernan's qualifications. Secretary Bessent calls his credentials 'ideal' for Treasury's domestic finance portfolio.

October 2025 - Present

Under Secretary of Domestic Finance

U.S. Department of the Treasury

Confirmed as Under Secretary of Domestic Finance — the Treasury official who oversees fiscal policy, public debt management, and financial institution regulation. Most critically for the Fanniegate thesis: this is the office that holds Treasury's side of the PSPAs with Fannie Mae and Freddie Mac. Any path out of conservatorship requires this office's consent. McKernan now sits in that chair.

What McKernan Brings

Housing Finance Architecture

Helped develop Treasury's 2019 Housing Reform Plan. Served as Senior Counsel at FHFA — the conservator of Fannie and Freddie. Advised senators on GSE reform. Now oversees the PSPAs from Treasury's side. No one in government has touched more pieces of the housing finance puzzle.

Banking Regulation & Capital Standards

A decade of private practice in banking law at WilmerHale and Hogan Lovells, plus two years on the FDIC Board where he dissected Basel III capital proposals and bank merger frameworks. Understands financial regulation from both sides — the institutions subject to it and the agencies that enforce it.

Principled Independence

At the FDIC, McKernan was nominated by Biden but dissented on key Democratic priorities — Basel III endgame, bank merger rules, and the SVB bailout. He called the SVB and Signature rescues what they were: bailouts that privatize gains and socialize losses. That kind of intellectual honesty is rare in Washington.

Regulatory & Legislative Fluency

Private practice attorney. Senate Banking Committee counsel. Treasury policy advisor. FHFA senior counsel. FDIC board member. McKernan has operated in every arena where financial regulation gets debated, written, and enforced. He knows the legislative process, the regulatory process, and the litigation process.

GSE Conservatorship Mechanics

McKernan has been circling the GSE question for nearly a decade — from advising Corker on housing finance reform, to developing Treasury's housing reform plan, to serving at FHFA during the conservatorship, to now controlling Treasury's side of the PSPAs. He doesn't need a briefing. He wrote the briefing.

How I Know McKernan

Through the Fanniegate lens — eight books and counting

I don't know Jonathan McKernan personally. I know him the way anyone who has spent a decade studying the Fannie Mae and Freddie Mac conservatorship knows the key players — by tracking their careers, reading their public statements, analyzing their policy positions, and understanding what their appointments mean for the thesis.

I've written eight books about Fanniegate — the conservatorship of Fannie Mae and Freddie Mac, the net worth sweep, and the case for recap and release. When you spend that long studying one topic, you learn to identify the people who will determine the outcome. McKernan is now the single most important name on that list — because his office holds Treasury's side of the PSPAs.

I first noticed McKernan when he was at FHFA, having come from Treasury where he helped develop the 2019 Housing Reform Plan. Then I watched him on the FDIC Board, where his dissents showed the kind of intellectual rigor you want in someone handling the GSE question. When Trump pivoted him from the CFPB nomination to Under Secretary of Domestic Finance, it clicked — Bessent put the person with the most housing finance experience in the chair that controls the PSPAs.

McKernan and Luke Pettit are the two-person team at Treasury shaping the future of Fannie and Freddie. Pettit as Assistant Secretary for Financial Institutions handles the broader GSE policy framework. McKernan as Under Secretary of Domestic Finance oversees the PSPAs directly. Together, they have the expertise and the authority to navigate conservatorship exit. For anyone following the Fanniegate saga, these are the names that matter.

Why He Matters

Fannie Mae and Freddie Mac have been in conservatorship since September 2008. Nearly two decades. The U.S. Treasury holds senior preferred stock and warrants in both companies through the Preferred Stock Purchase Agreements — the PSPAs. Any path out of conservatorship requires Treasury's consent. The Under Secretary of Domestic Finance is the Treasury official who oversees the PSPAs directly.

Jonathan McKernan now sits in that chair. And unlike most political appointees who need months to get up to speed, McKernan has been circling this question for nearly a decade. He helped write Treasury's 2019 Housing Reform Plan. He served inside FHFA during the conservatorship. He advised senators on GSE reform. He understands the PSPA mechanics, the capital requirements, the legislative landscape, and the regulatory architecture — because he has worked on every piece of it from different institutional vantage points.

The Mortgage Bankers Association said McKernan “will play a key role in the future of Fannie Mae and Freddie Mac” and emphasized the need for “a careful and calibrated plan for the GSEs' future.” The National Housing Conference praised his leadership in “bringing together stakeholders” to provide “important intellectual capital” on the GSE question. Secretary Bessent called his credentials “ideal” for Treasury's domestic finance portfolio.

For anyone following the Fanniegate saga, Jonathan McKernan is the gatekeeper. His office must consent to any change in the PSPAs, any capital framework modification, any path out of conservatorship. The right person is in the right chair at the right time — and the mortgage industry knows it.

Get Glen's Musings

Occasional thoughts on AI, Claude, investing, and building things. Free. No spam.

Unsubscribe anytime. I respect your inbox more than Congress respects property rights.