The Consumer Financial Protection Bureau (CFPB) on Thursday moved forward with sweeping layoffs at the agency as the Trump administration looks to remake the consumer enforcement agency.
A source familiar with the process told FOX Business that more than 1,500 workers at the CFPB will receive reduction-in-force notices. The layoffs are across the CFPB’s core functions, including supervision of financial institutions and its enforcement arm.
Following the job cuts, the CFPB will have a little more than 200 remaining personnel to carry out the agency’s regulatory activities.
The Wall Street Journal reported that on Wednesday, a letter was sent to CFPB staff from the agency’s chief legal officer, Mark Paoletta, which outlined how the agency is refocusing its efforts on “tangible harm to consumers” by reallocating resources from enforcement and supervision activities that can be done by states.
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Signage is seen at the Consumer Financial Protection Bureau (CFPB) headquarters in Washington, D.C., U.S., May 14, 2021. REUTERS/Andrew Kelly (REUTERS/Andrew Kelly / Reuters)
The memo said the CFPB’s supervision arm will reduce the number of supervisory “events” or exams by 50%, with a focus on “conciliation, correction and remediation of harms subject to consumers’ complaints.”
CFPB will also move its focus to primarily being on depository institutions, rather than non-depository institutions, returning to a 2012 mix when 70% of CFPB supervision was on banks and depository institutions and 30% on nonbanks. The memo said that currently that mix has “completely flipped” with over 60% on nonbanks and under 40% on banks and depository institutions.
The memo went on to say the CFPB is going to focus its anti-fraud efforts in areas where there are “material and measurable consumer damages as opposed to matters based on the Bureau’s perception that consumers made ‘wrong’ choices.”
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OMB Director Russell Vought is currently the acting director of the CFPB. (Photo by Andrew Harnik/Getty Images / Getty Images)
Mortgages will receive the highest priority, followed by data furnishing violations, consumer contracts and debts, fraudulent overcharges and fees, as well as inadequate controls to protect consumer information.
Additionally, the new CFPB priorities will see the agency step back from areas where state regulators have significant authority unless it’s required to do so by law, while also eliminating duplicative regulatory functions that other federal agencies have jurisdiction over.
The memo said the CFPB “will not pursue supervision under novel legal theories” and will “focus on areas that are clearly within its statutory authority.”
Activists have protested the Trump administration’s cuts at agencies such as the CFPB. (Alex Wong/Getty Images / Getty Images)
Areas that are to be deprioritized at the CFPB include loans for other “initiatives for ‘justice involved’ individuals (criminals),” as well as medical debt, peer-to-peer platforms and lending, student loans, remittances, consumer data, along with digital payments, per the memo.
The CFPB is currently led by Acting Director Russell Vought, who is also the head of the Office of Management and Budget (OMB).
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Jonathan McKernan has been nominated to serve as the CFPB director, though his nomination hasn’t yet been considered by the Senate. McKernan was previously a member of the board of directors at the Federal Deposit Insurance Corporation (FDIC).
