As first reported by Reuters, the Consumer Financial Protection Bureau (CFPB) may be on the verge of reducing more of its workforce due to new limits under Congressional funding. According to individuals familiar with the matter, the Bureau faces a self-imposed funding crunch, with staff concerned there may be insufficient funds available to meet payroll and severance costs in the new fiscal year which begins in October.
Reports state that an email from the human resources department said it would not proceed with plans to restructure the agency before federal courts have finally ruled on them, but was evaluating “workforce optimization opportunities.”
Attempts have been made by the Trump administration to shut down the Bureau ever since the President officially took office in late January.
President Trump’s original draft of his tax measure, One Big Beautiful Bill, included a provision that would have placed a funding cap on the CFPB, a move that would have cut approximately $6.4 billion from the Bureau, thus reducing the Bureau’s funding to zero percent, and eliminating the agency.
However, Senate Parliamentarian Elizabeth MacDonough ruled that several key pieces of the bill violated the Byrd Rule, a measure that prohibits provisions considered “extraneous” to the federal budget. Among the changes by MacDonough, striking the provision that would have eliminated the agency.
Sen. Tim Scott’s provision to the bill saw the CFPB’s available operating budget go from 12% to 6.5% of the Federal Reserve System’s 2009 total operating expenses, adjusted for inflation. The updated provisions would decrease the CFPB’s funding cap for a savings of $2 billion, and rescind unobligated funds from the Inflation Reduction Act for green housing initiatives to the Treasury for a savings of $138 million. Another provision would take unused money from the Securities and Exchange Commission (SEC) for technology modernization and eliminate the fund permanently for a savings of $448 million. The net budgetary impact from those cuts would result in a 10-year budgetary savings of $1.595 billion, according to a summary of the provisions.
Targeted by the Department of Government Efficiency (DOGE), the CFPB avoided being totally shut down in late March, as U.S. District Judge Amy Berman Jackson denied actions by the Trump administration from firing Bureau employees, and ordered the reinstatement of workers who were previously terminated.
In Civil Action No. 25-0381, National Treasury Employees Union v. Russell Vought (in his official capacity as Acting Director of the Consumer Financial Protection Bureau), the National Treasury Employees Union (NTEU) and other groups sued Acting CFPB Director Russell Vought in February over the dismantling of the Bureau, arguing that the effort violates the separation of powers between the branches of government.
CFPB Director Rohit Chopra, who had served in the role since being appointed by President Joe Biden in 2021 for a five-year term, announced that he has been fired by President Donald Trump in early February.
The CFPB is an independent agency responsible for consumer protection in the financial sector, including banks, credit unions, securities firms, payday lenders, mortgage servicing operations, foreclosure relief services, debt collectors, for-profit colleges, and other financial companies. The Bureau was proposed in 2007 by Elizabeth Warren while she was a law professor and she played an instrumental role in its establishment.
The CFPB’s creation was authorized by the Dodd-Frank Wall Street Reform and Consumer Protection Act, whose passage in 2010 was a legislative response to the 2008 financial crisis and the subsequent Great Recession, and is an independent bureau within the Federal Reserve.
Since its establishment, the Bureau has returned more than $21 billion to consumers who were defrauded by financial institutions.
The post CFPB Reportedly Nearing Staffing Cuts first appeared on The MortgagePoint.
