WASHINGTON — The Consumer Financial Protection Bureau (CFPB), created in the aftermath of the Great Recession to safeguard Americans from financial misconduct, is facing significant downsizing. This initiative forms part of an extensive overhaul of the federal agency by President Donald Trump. His administration has long targeted the agency, arguing against its regulatory measures, with a notable push from Elon Musk as part of the Department of Government Efficiency’s agenda.
Under proposed plans, the CFPB will witness a dramatic reduction in its workforce, with about 1,500 positions being cut, leaving only around 200 employees. An administration official, who requested anonymity due to the sensitivity of the information, confirmed the expected layoffs. Initial reports about the layoffs surfaced from Fox Business. Employees began receiving notifications on Thursday, effectively terminating their access to agency systems by Friday night.
Communications sent to staff cited, “The Consumer Financial Protection Bureau identified your position being eliminated and your employment is subject to termination in accordance with reduction-in-force (RIF) procedures.” A federal judge initially opposed the administration’s abrupt dismantling of the agency, labeling it as a swift attempt to disable it. However, subsequent appeals court rulings allowed the distribution of layoff notifications to those deemed unnecessary for fulfilling statutory obligations.
In response, the National Treasury Employees Union implored a federal judge to intervene, citing the severe implications of reducing the agency’s staff by 90% in a short span with minimal preparation or assessment of individual roles. “It is unfathomable that cutting the Bureau’s staff would not interfere with the performance of its statutory duties,” the union emphasized in its plea.
Mark Paoletta, the agency’s chief legal officer, informed employees of a revised mission focusing primarily on consumer-driven harm. The CFPB will prioritize tackling mortgage-related issues while shifting away from enforcement and supervisory roles that states could manage instead. Other concerns, such as medical debt, student loans, and digital transaction dilemmas, will receive diminished attention.
This strategic realignment could prove advantageous for Elon Musk’s ambitions to offer financial services within his social media enterprise, X. Long interested in integrating peer-to-peer payments on his platform, he recently announced a partnership with Visa to advance this goal—efforts that may now attract less scrutiny from the CFPB.
Criticism has swiftly followed these developments. Massachusetts Senator Elizabeth Warren, instrumental in the founding of the CFPB, condemned the Trump administration’s move. She alleged the president was hindering the agency’s ability to protect citizens from exploitation by larger financial institutions. Warren characterized the restructuring as a direct attack on both consumer rights and democratic integrity, vowing staunch resistance.
The CFPB was established in 2010, two years post the financial crisis and subprime mortgage fallout, having since facilitated nearly $20 billion in financial relief for U.S. consumers through debt cancellation, compensation, and loan adjustments.