Trump Administration Plans to Gut CFPB with Mass Layoffs
The Trump administration is reportedly planning to dismantle the Consumer Financial Protection Bureau (CFPB) by firing 95% of its staff and canceling its Washington, D.C. headquarters lease, alleges a federal lawsuit filed to obstruct these actions.
If successful, the mass layoffs would decimate an agency tasked with regulating large banks and other financial institutions, including payday lenders and credit bureaus. The CFPB is currently closed after acting Director Russell Vought ordered staff to cease operations and work remotely this week. Layoffs and contract terminations with vendors and experts have also begun.
Administration officials have been transparent about their intention to eliminate the agency: Tesla CEO Elon Musk tweeted "RIP CFPB" after members of his DOGE team visited its headquarters, while President Trump told reporters it was "very important to get rid of" and "a waste" due to a "vicious group of people" running it.
The lawsuit, submitted on Thursday in Washington by a federal employees union and nonprofits affiliated with the CFPB, seeks to overturn Vought's standstill orders and prevent further firings. It maintains that the layoffs would incapacitate the bureau from fulfilling its statutory obligations.
"Trump and Vought's actions to disable the CFPB have already caused mass confusion and imposed significant, irreparable harm on consumers nationwide," the lawsuit claims. "Without immediate relief, the defendants will continue to disrupt the lives of countless civil servants."
Among the CFPB's mandated duties, the lawsuit highlights that it has halted all supervision of banks and lenders. The agency's consumer complaint portal has also been severely affected, despite typically receiving hundreds of thousands of complaints monthly.
According to the complaint, Vought 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 consumer watchdog would not require new funding for the upcoming quarter as he intended to deplete its reserves.
While the lawsuit does not specify a source for the mass firing rumors, reports have circulated among current and former staff. It asserts that Trump officials have "reportedly informed the General Services Administration that they are terminating the lease of the CFPB's headquarters."
The clash over the CFPB represents a test of the Trump administration's authority to reshape the federal bureaucracy. Created by Congress in response to predatory lending practices contributing to the 2007-2008 crisis, the CFPB's dismantlement is seen as an attempt to usurp Congressional power and violate the Constitution.
The CFPB is not the only agency facing mass layoffs. Bloomberg reports that the Department of Housing and Urban Development has been instructed to dismiss 50% of its workforce. However, courts have temporarily halted some firings. On Thursday, a federal judge extended an order preventing the administration from furloughing USAID employees as part of its effort to dismantle the agency. A hearing in the CFPB case is scheduled for 2 p.m. Friday before US Senior Judge Amy Berman Jackson.