The Consumer Financial Protection Bureau sent out a reduction-in-force notice to more than 1,500 workers on Thursday, according to reporting from Fox Business. The figure is about 88% of the agency’s staff, along with a 50 percent reduction in its financial inspection operations.
The CFPB will be left with about 200 remaining employees to carry out the agency’s mission. Employees were informed they would lose system access by 6 p.m. on April 18, with separation from federal service set for June 16, unless they qualify for other available roles.
The cuts come after an agency memo sent out on Wednesday, reviewed by the Washington Examiner, informed staff that the agency will cut its inspections of financial services companies in half.
The shift prioritizes initiatives impacting service members, while pulling back from matters such as student loan issues, medical billing, digital transactions, and the handling of consumer information, according to the Wednesday memo.
The document sent by Mark Paoletta, the chief legal officer, told staff the agency would be focusing on “tangible harms to consumers” and will “shift resources away from enforcement and supervision that can be done by the States. All prior enforcement and supervision priority documents are hereby rescinded.”
“The bureau will focus its enforcement and supervision resources on pressing threats to consumers, particularly service members and their families and veterans,” Paoletta wrote.
Top priority will be given to mortgage-related issues, with attention also directed toward violations in data reporting, unfair contract terms and debt practices, deceptive fees and overcharges, and insufficient safeguards for consumer data.
According to the Wednesday memo, the CFPB will scale back its focus on several areas, including loan programs aimed at individuals involved with the justice system, medical debt, peer-to-peer lending and platforms, student loans, remittances, digital payment systems, and the handling of consumer data.
Formed in the wake of the 2008 financial collapse, the CFPB was tasked in 2010 with policing consumer financial laws, particularly at nonbank firms like mortgage lenders and payment processors. But the bureau now plans to pivot, shifting oversight away from nonbank institutions and directing more scrutiny toward the country’s largest banks, which it says have been less of a focus in recent years.
The memo indicated that the CFPB intends to continue activities on a smaller and more limited scale, even though President Trump and entrepreneur Elon Musk, who was tasked with leading government cost-cutting initiatives, both advocated for the agency’s dismantling.
Jonathan McKernan, Trump’s nominee to lead the CFPB, recently testified before the Senate Banking Committee that the agency has “acted in a politicized manner” and is suffering from a “crisis of legitimacy.” The Senate has not yet voted on his confirmation.
The CFPB is led by acting Director Russell Vought, who is also the head of the Office of Management and Budget.
Democrats have argued that the agency is a critical safeguard for consumers who use financial products, pointing to the fact that the CFPB has returned more than $21 billion to consumers who were victims of fraud or scams.
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Sen. Elizabeth Warren (D-MA), who played a key role in establishing the agency as a watchdog over banks and credit card companies 15 years ago, is teaming up with Sen. Andy Kim (D-NJ) and is calling for an investigation into efforts to weaken the agency. The pair wrote a letter to the Comptroller General of the United States on Tuesday, according to reporting by Fortune.
“Despite the critical importance of the CFPB and its statutory requirements, the Trump Administration has taken steps to dismantle the agency,” Warren and Kim said.
The senators said it “is essential that Congress and the public understand how the Trump Administration’s recent actions have affected the CFPB’s ability to carry out its mission and statutory obligations.”
