WASHINGTON (AP) — President Donald Trump is drastically shrinking the workforce and mission of the Consumer Financial Protection Bureau, eviscerating an agency created after the Great Recession with the goal of protecting Americans from fraud, abuse and deceptive practices.
The plan, which is being challenged by an employee union, is the latest step in an extraordinary reshaping of the federal government. Conservatives and businesses have often chafed at the agency's oversight and investigations, and Elon Musk made it a top target of his Department of Government Efficiency.
Roughly 1,500 employees are slated to be cut, leaving around 200 people, according to an administration official who wasn't authorized to disclose the figure publicly and spoke on condition of anonymity. Fox Business first reported the number of layoffs.
Employees started receiving layoff notices on Thursday. Their access to agency systems, including email, ends on Friday evening.
"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," the emails said.
The Trump administration's plans have been the subject of a legal battle. A federal judge initially blocked what she described as “a hurried effort to dismantle and disable the agency."
However, an appeals court said Friday that layoff notices could be sent “to employees whom defendants have determined, after a particularized assessment, to be unnecessary to the performance of defendants’ statutory duties.”
On Thursday, the National Treasury Employees Union asked a federal judge to step in by arguing that officials were violating the order.
“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, to say nothing of the implausibility of the defendants having made a 'particularized assessment' of each employee’s role in the three-and-a-half business days since the court of appeals imposed that requirement,” the union wrote.
Mark Paoletta, the chief legal officer for the agency, sent a message to employees on Wednesday describing the CFPB’s reduced mission.
“To focus on tangible harms to consumers, the Bureau will shift resources away from enforcement and supervision that can be done by the States,” he wrote.
Problems with mortgages will be the top priority, while issues involving medical debt, student loans and digital payments will receive less attention, according to Paoletta.
The change in focus could benefit Musk’s efforts to offer financial services through X, his social media company. He has long wanted to allow users to make peer-to-peer payments using his platform, and he announced in January that X would be working with Visa.
Such services will now be a lower priority for the CFPB.
Sen. Elizabeth Warren, a Massachusetts Democrat who helped create the CFPB, said in a statement that Trump was preventing the agency from doing “its job of helping Americans who get scammed by big banks and giant corporations.”
She described his plans as "yet another assault on consumers and our democracy by this lawless administration, and we will fight back with everything we’ve got.”
The CFPB was formed in 2010, two years after the financial crisis and subprime mortgage-lending scandal. Officials said that it has obtained nearly $20 billion in financial relief for U.S. consumers since its founding in the form of canceled debts, compensation and reduced loans.
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Chris Megerian, The Associated Press
