Key Insight: The CFPB nonetheless exists and mass layoffs haven’t but occurred however the Trump administration has dropped enforcement actions and eradicated guidelines, nullifying the company’s broad attain. Expert Quote: “The final eight months or so have been not like any others with only a fully completely different tenor, fully completely different ranges of exercise and a number of uncertainty,” mentioned Jonathan Kolodziej, a associate at the regulation agency Bradley Arant Boult Cummings LLP.Forward Look: Most of the company’s employees are being paid to not work however there are nonetheless open positions being stuffed by Trump loyalists. A court docket battle with the National Treasury Employees Union is prone to be determined by the Supreme Court.
The Trump administration has successfully neutralized the Consumer Financial Protection Bureau, nevertheless it hasn’t eradicated the bureau completely.
For the previous eight months, the CFPB has been subjected to a near-daily onslaught of reversals of guidelines, laws and enforcement actions that have been issued by former CFPB Director Rohit Chopra in the Biden administration.
The pullback of supervisory or enforcement work occurred in early February, first underneath Treasury Secretary Scott Bessent, who was named appearing CFPB director on Feb. 2, made retroactive to Jan. 31. Bessent began work on a Monday telling CFPB workers to “cease the whole lot,” and by Friday, he had been changed by Russell Vought, who already had an enormous job in the Trump administration as director of the Office of Management and Budget.
As the architect of Project 2025, the Republican blueprint for altering the federal authorities, Vought has been the driving power behind nullifying the bureau throughout the second Trump administration. He wrote that the CFPB “is a extremely politicized, damaging, and totally unaccountable federal company. It is unconstitutional. Congress ought to abolish the CFPB.”
The blow-by-blow of the CFPB’s dismantling started instantly after Vought took over the bureau on Feb. 6 and Elon Musk’s DOGE employees arrived at the company’s headquarters. Musk wrote the subsequent day on X: “CFPB RIP,” subsequent to an emoji of a tombstone. On Feb. 8, Vought advised employees to “stand down,” and cease working. He additionally introduced that the CFPB wouldn’t be taking the subsequent draw of funding from the Federal Reserve.
“The final eight months or so have been not like any others with only a fully completely different tenor, fully completely different ranges of exercise and a number of uncertainty,” mentioned Jonathan Kolodziej, a associate at the regulation agency Bradley Arant Boult Cummings.
Kolodziej described the timeline of the CFPB’s actions, during which Vought ordered “a complete pause,” of the bureau’s work.
The timeline of a diminished company
On Feb. ninth, Vought closed the bureau’s headquarters in Washington D.C., locking out the CFPB’s 1,750 workers. He was promptly sued the similar day by the National Treasury Employees Union. Two days later, President Trump confirmed in the Oval Office that his aim was to get rid of the CFPB.
Currently, nearly all supervision and enforcement has been halted, regardless of the CFPB being the main regulator of huge banks with belongings of $10 billion or extra. Nonbank supervision additionally has been eradicated.
“I have never seen or heard a lot in the manner of supervisory exams or new enforcement investigations since the administration modified arms in February,” mentioned Chris Willis, a associate at the regulation agency Troutman Pepper Locke. “Vought has been efficient at neutralizing the company.”
Still, so as to reverse present guidelines — and to effectuate the Trump administration’s broader coverage of deregulation — the bureau nonetheless wants some employees to carry out legally-required work.
“They really need to have some of us there in the CFPB, [because] there are a number of laws over the final decade that they’ll simply have a look at and eliminate,” Kolodziej mentioned, referring to Covid-era mortgage servicing guidelines which were rescinded. “Everything since then has been in flux.”
The lawsuit by the National Treasury Employees Union, filed in the U.S. District Court for the District of Columbia, is amongst the greater than 400 lawsuits filed since January in opposition to the Trump administration over its efforts to get rid of federal businesses and hearth their employees.
The union’s lawsuit, which is ongoing, claimed that the CFPB would not be capable to fulfill all of its statutory obligations if Vought proceeded on the path of firing workers.
The union had alleged that Vought deliberate a mass discount in power, or RIF, on February 14, and the NTEU acquired a brief restraining order from District Court Judge Amy Berman Jackson, who sided with what the union alleged was a plot to dismantle the company with out enter from Congress.
“No statute authorizes the defendants to cease the CFPB from doing what Congress mentioned it should, and so they have provided no reasoned rationalization for his or her extraordinary efforts to wind down the company,” the NTEU Local 335 has mentioned.
But final month, Vought gained an attraction by a three-judge panel of the U.S. Court of Appeals for the D.C. Circuit to fireplace as much as 90% of the CFPB’s workers. The union has 45 days to file an attraction, en banc, to the full appeals court docket. Many workers imagine that the case will go to the Supreme Court, and is probably not determined till 2026.
Less enforcement
The rescinding of laws and dropping of enforcement actions additionally started in February when Chief Legal Office Mark Paoletta began dismissing lawsuits that had been filed by Chopra. From Capital One to Rocket Homes, Vanderbilt Mortgage to Zelle and the three largest banks, the CFPB underneath Vought has dropped greater than half of all pending enforcement actions.
Because the CFPB was created by Sen. Elizabeth Warren, D-Mass., the rating member of the Senate Banking Committee, (earlier than she was a senator), the company’s workers have lengthy been thought-about to be progressive Democrats. Under the second Trump administration, Vought has issued a number of reductions-in-force, or RIF notices, together with mass firings of non permanent employees and people on probation, who then have been rehired — with extra firings coming once more quickly.
In April, Vought and Paoletta despatched out a memo itemizing the CFPB’s 11 priorities, which particularly mentioned that the company would shift its sources away from enforcement and supervision that may be performed by the states, in accordance with the memo posted on X. By May, Vought directed the company to get rid of greater than 70 steering paperwork, citing President Trump’s mandate to decontrol and scale back prices for companies.
The CFPB additionally mentioned that it will now not publicly disclose shopper criticism narratives or sure bank card criticism knowledge. In all, Vought single-handedly withdrew eight coverage statements, seven interpretive guidelines, 13 advisory opinions and 39 steering paperwork.
There have been a lot of piecemeal rulemaking actions taken by Vought and courts. Vought has refused to implement the payday lending rule; he rescinded a nonbank registry, and requested a Texas court docket to vacate a rule on bank card late charges, which was then thrown out. The CFPB made a contentious determination to reissue the 1033 open banking rule, and a federal choose in July repealed the CFPB’s medical debt rule, agreeing with the Trump administration that Chopra exceeded his statutory authority.
The invoice that precipitated the largest blow
Many consultants agree that maybe the single largest blow to the CFPB got here in July when Congress handed and the president signed an enormous tax and spending invoice, largely alongside occasion strains, with two Republican holdouts.
The invoice created a brand new methodology for controlling the funding of the CFPB by capping the amount of cash that the bureau can obtain from the Federal Reserve’s working price range at 6.5% — down from 12% beforehand. With the CFPB’s price range this 12 months capped at $446 million, down from $785.4 million in most funding final 12 months, the bureau’s workers are bracing for a brand new spherical of layoffs.
Many consultants acknowledge that whereas the CFPB at present isn’t functioning as a traditional regulator, it has not been eradicated.
“I do suppose will probably be exhausting to get again to the place the CFPB was as a result of they completely lower the CFPB funding in half,” Kolodziej mentioned.
He argues that Congress wants to jot down statutes with extra far particular directions on how an company regulates.
“If the CFPB must conduct 400 exams a 12 months, then we want a statute that claims that as a result of proper now, all the statute says is that the CFPB shall require reviews and conduct examinations on a periodic foundation, and that is completely topic to debate and interpretation.”
