The Consumer Financial Protection Bureau (CFPB), under the leadership of Trump appointee Russell Vought, is set to undergo significant workforce reductions, potentially laying off nearly all of its 1,700 employees. This alarming development was revealed through testimony from current employees and has raised concerns about the future of the agency, which was established to protect consumers following the 2008 financial crisis.
Recent statements released by federal employees indicate that the proposed mass layoffs were discussed in meetings with senior CFPB leaders and members of the Department of Government Efficiency (DOGE), led by Elon Musk. An employee, using the pseudonym Alex Doe for fear of retaliation, disclosed that the layoffs will occur in three phases. The first phase involves the elimination of probationary and term employees. Following this, approximately 1,200 layoffs are anticipated, drastically reducing the workforce to a minimal number of staff members. Finally, within 60-90 days, the remaining employees will face termination, effectively winding down the agency.
The timing of these layoffs is critical for the CFPB, as the agency plays a pivotal role in consumer protection. Since the arrival of DOGE operatives earlier this month, the CFPB has closed its Washington headquarters, initiated the first wave of layoffs, and instructed remaining staff to halt most of their operations. This shift in focus has also led to the dismissal of at least four significant cases against financial firms, including Capital One, which were previously aimed at addressing billions in alleged consumer harm.
Internal documents reveal a stark contrast between the public statements made by Vought and the actions taking place within the bureau. In a recent motion, Vought asserted that a 'more streamlined and efficient bureau' would still involve the existence of the CFPB. However, employee testimonies suggest that the plan is to reduce the agency to just five employees. These positions would either exist within a standalone office or be absorbed into another regulatory body. According to Drew Doe, another current employee, senior executives explicitly communicated plans to minimize the CFPB to its legally mandated positions.
The CFPB has been a longstanding target of criticism from Republicans and financial institutions, accused of overstepping its authority in regulating companies. Recently, Musk has publicly expressed his desire to see the CFPB dismantled, stating, "RIP CFPB" on his social media platform. Testimonies indicate that senior CFPB staff members have been deferring to DOGE employees on key decisions, with specific directives from DOGE personnel to implement significant layoffs by February 14. According to Alex Doe, the only reason these layoffs did not occur as planned was due to a court order.
While both Musk and Vought have advocated for the CFPB's termination, only Congress holds the power to officially dismantle the agency, established under the Dodd-Frank Act of 2010. Vought's actions appear to aim at retaining the CFPB's existence while drastically crippling its operational capabilities. Employees question how a handful of staff members could feasibly meet the agency's extensive legal obligations, which include managing millions of consumer complaints and advocating for vulnerable populations such as military veterans and senior citizens.
On Thursday, Jonathan McKernan, President Trump’s nominee to lead the CFPB, assured lawmakers, including Senator Elizabeth Warren, that he would uphold the agency's mission and enforce relevant laws. McKernan acknowledged the challenges facing the CFPB, particularly with Vought canceling the lease on its headquarters. Senator Jack Reed expressed concern over McKernan's predicament, suggesting that he might be navigating a 'sinking ship' without adequate support.
As the situation unfolds, the future of the CFPB and its ability to protect consumers remains uncertain, raising significant questions about the agency's capacity to fulfill its vital role in the financial landscape.
