Mass Layoffs Hit Consumer Financial Protection Bureau Amid Restructuring Efforts

The Consumer Financial Protection Bureau (CFPB) is facing significant workforce reductions, with as many as 1,500 of its 1,700 employees at risk of losing their jobs, according to a union representing the agency’s staff.

The layoffs come as part of the Trump administration’s push to scale back the agency’s operations, following a recent ruling by a federal appeals court that allowed the agency to proceed with its workforce cuts.

On Thursday, employees across various divisions of the CFPB began receiving official notifications that their positions were being eliminated as part of a broader reduction-in-force (RIF) effort. By late afternoon, many staff members had been informed that they would lose access to their work accounts and systems the following evening.

The reductions are part of the administration’s ongoing effort to restructure the CFPB, which was created after the 2008 financial crisis to protect consumers from financial fraud and abusive practices. The cuts come after a prolonged legal battle over the agency’s future. In February, a federal judge temporarily blocked the administration’s efforts to fire employees. However, a ruling from the U.S. Court of Appeals last week permitted the administration to proceed with layoffs, as long as a “particularized assessment” of each employee’s role was conducted.

In a court filing, the National Treasury Employees Union, which represents CFPB staff, estimated that nearly 90% of the agency’s workforce could be let go. The union has called for a further investigation into whether the mass layoffs violate the court’s injunction, arguing that the swift reduction in staff would severely impact the agency’s ability to fulfill its statutory responsibilities.

The restructuring plan, announced by CFPB officials in a memo earlier this week, significantly reduces the agency’s mission. Mark Paoletta, the agency’s chief legal officer, stated that the bureau would focus its resources on addressing issues like mortgage problems, while deprioritizing areas such as student loans, medical debt, and peer-to-peer lending oversight. These changes could potentially benefit tech companies, including X (formerly Twitter), which is exploring the addition of financial services like peer-to-peer payments.

The layoffs have sparked strong reactions from lawmakers, with Sen. Elizabeth Warren (D-Mass.), a key architect of the CFPB’s creation, condemning the efforts to weaken the agency. “This is yet another attack on consumers by an administration that is working to shield big banks and corporations from accountability,” Warren said in a statement.

Despite the challenges, the CFPB has been credited with recovering more than $21 billion for consumers since its establishment, returning funds through debt cancellation, refunds, and other forms of relief. However, the future of the agency, and its ability to continue this work, is now uncertain as it faces the prospect of dramatically reduced staff and a redefined mission.

The New York Times, the Hill, and the Associated Press contributed to this report.