Trump Administration Plans to Gut Consumer Financial Protection Bureau

The Trump administration is reportedly planning to dismantle the Consumer Financial Protection Bureau (CFPB) by firing 95% of its staff and canceling its headquarters lease in Washington, D.C., according to a lawsuit filed to prevent the move.

If successful, the mass layoffs would effectively cripple the agency responsible for regulating large banks and financial services companies such as payday lenders and credit bureaus.

The CFPB has been effectively shut down since acting Director Russell Vought ordered staff to halt all work and remain home. It has also begun laying off dozens of employees and canceling contracts with vendors and expert witnesses.

Administration officials have been vocal about their intention to eliminate the agency. After visiting CFPB headquarters last week, Elon Musk tweeted "RIP CFPB," while President Trump told reporters on Tuesday that it was "very important to get rid of."

The lawsuit, filed by a federal employees union and nonprofits that collaborate with the CFPB, seeks to overturn Vought's work stop orders and prevent further firings. It argues that the mass layoffs would render the bureau incapable of fulfilling its legal responsibilities.

"Trump and Vought's actions to disable the CFPB have already caused mass confusion and imposed significant and irreparable harm on consumers across the country," the lawsuit states. "Absent immediate relief, the defendants will continue to upend the lives of countless civil servants."

Among its statutory duties, the CFPB has suspended all supervision of banks and lenders, the lawsuit notes. The agency's consumer complaint portal has also been "severely disrupted," which is particularly concerning given that it typically receives hundreds of thousands of complaints each month.

According to the lawsuit, Vought also plans to return the CFPB's operating reserves to the Federal Reserve, which funds the agency. Over the weekend, he informed the Fed that the CFPB would not require new funding for the coming quarter because he intended to deplete its reserves.

While the lawsuit does not provide a source for the mass firing claim, rumors have circulated among current and former staffers. It also states that Trump officials have "reportedly informed the General Services Administration that they are terminating the lease of the CFPB's headquarters."

The battle over the CFPB is expected to become another significant test of the Trump administration's authority to unilaterally reshape the federal bureaucracy. The agency was created by Congress as part of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act to prevent predatory lending practices that contributed to the 2007-2008 housing and financial crisis.

The lawsuit argues that by dismantling the agency, the Trump administration is attempting to "usurp" powers reserved for Congress and failing to faithfully execute the laws as required by the Constitution. "The CFPB... can be eliminated only by Congress," it states.

The CFPB is not the only agency facing potential mass layoffs. Bloomberg reports that leaders at the Department of Housing and Urban Development have been instructed to lay off 50% of its workforce. However, courts have already intervened to temporarily halt some firings.

On Thursday, a federal judge extended his order blocking the Trump administration from placing thousands of USAID employees on unpaid leave as part of its plan to dismantle the agency. A hearing in the CFPB case is scheduled for 2 p.m. Friday before US Senior Judge Amy Berman Jackson.