WASHINGTON (AP) — President Donald Trump is significantly reducing both the workforce and mission of the Consumer Financial Protection Bureau (CFPB), effectively dismantling an agency established to protect Americans from fraud, abuse, and deceptive practices in the wake of the Great Recession.
The plan, which faces challenges from an employee union, marks a continued effort to reshape the federal government significantly.
Conservatives and businesses have frequently criticized the agency for its oversight and investigations, with figures like Elon Musk targeting it as a significant obstacle in his Department of Government Efficiency.
Approximately 1,500 employees are expected to be laid off, leaving roughly 200 remaining staff members, according to an administration official who spoke anonymously due to the sensitive nature of the information.
Fox Business was the first to report the layoffs.
Employees began receiving layoff notices on Thursday, with their access to agency systems, including email, set to terminate the following evening.
The notification emails detailed that the Bureau had identified their positions for elimination, stating that their employment was subject to termination in accordance with reduction-in-force (RIF) procedures.
The Trump administration’s plans have generated legal disputes, with a federal judge initially blocking what she termed a “hurried effort to dismantle and disable the agency.”
However, an appeals court ruled on Friday that layoff notices could proceed for employees deemed unnecessary for the performance of the Bureau’s statutory duties.
In response, the National Treasury Employees Union asked a federal judge to intervene, contending that agency officials were violating the order prohibiting immediate layoffs.
“It is unfathomable that cutting the Bureau’s staff by 90 percent in just 24 hours, with no notice to people to prepare for that elimination, would not ‘interfere with the performance’ of its statutory duties,” the union asserted.
Mark Paoletta, the CFPB’s chief legal officer, sent a message to employees on Wednesday outlining the agency’s new, reduced mission.
To prioritize tangible harms to consumers, Paoletta indicated that the Bureau would be reallocating resources away from enforcement and supervision capabilities that states could now undertake.
Mortgage-related issues are now set to receive the highest priority, while concerns regarding medical debt, student loans, and digital payment systems will be deprioritized.
This shift in focus could be advantageous for Musk’s ambitions to provide financial services through his social media platform, X, where he has expressed a desire for users to engage in peer-to-peer payments.
In January, Musk announced that X would collaborate with Visa to implement these services.
With the CFPB’s newfound focus, issues surrounding these services will not be a priority.
Sen. Elizabeth Warren, a Massachusetts Democrat who was instrumental in creating the CFPB, issued a statement condemning Trump’s actions.
She argued that the President was obstructing the agency’s essential role in assisting Americans who fall victim to scams perpetrated by large banks and corporations.
Warren characterized the administration’s plans as “yet another assault on consumers and our democracy,” vowing to combat these changes through all resources available.
The CFPB was established in 2010, following the financial crisis and the subsequent subprime mortgage-lending scandal.
Since its inception, the Bureau has secured nearly $20 billion in financial relief for U.S. consumers, including debt cancellations, compensations, and reduced loan terms.
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