The Consumer Financial Protection Bureau was established following the Great Recession with the intention of shielding Americans from fraud, abuse, and dishonest business practices. President Donald Trump is destroying this organisation by substantially reducing its staff and mandate.
An staff union is contesting the plan, which is the most recent in a historic reorganisation of the federal government.
The agency’s monitoring and investigations have frequently been criticised by conservatives and corporations, and Elon Musk made it a primary focus of his Department of Government Efficiency.
According to an administration official speaking on condition of anonymity who was not authorised to publicly reveal the number, over 1,500 employees are expected to be let go, leaving about 200 people.
Notices of layoffs began to be sent to employees on Thursday. On Friday night, they will no longer have access to agency networks, including email.
“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,” according to the emails.
A court struggle has centred on the plans of the Trump administration. What she called “a hurried effort to dismantle and disable the agency” was first blocked by a federal judge.
Layoff letters, however, may be issued “to employees whom defendants have determined, after a particularised assessment, to be unnecessary to the performance of defendants’ statutory duties,” according to an appeals court ruling on Friday.
The National Treasury Employees Union argued that authorities were breaking the order and requested a federal judge to intervene on Thursday.
“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,” according to the union.
The agency’s top legal officer, Mark Paoletta, informed staff members on Wednesday of the CFPB’s diminished role.
“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.
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According to Paoletta, mortgage-related issues would be given priority, while problems with student loans, medical debt, and digital payments will get less attention.
Musk’s attempts to provide financial services through his social network business, X, may profit from the shift in emphasis.
He declared in January that X would be collaborating with Visa, fulfilling a long-standing desire of his to enable peer-to-peer payments through his platform.
The CFPB will now give such services less priority.
In a statement, Massachusetts Democrat Senator Elizabeth Warren, who was a founding member of the CFPB, claimed that Trump was impeding the organization’s ability to carry out “its job of helping Americans who get scammed by big banks and giant corporations.”
“We will fight back with everything we have,” she said, referring to his plans as “yet another assault on consumers and our democracy by this lawless administration.”
Two years after the financial crisis and the subprime mortgage-lending scandal, the CFPB was established in 2010.
According to officials, since its establishment, it has secured approximately $20 billion in financial assistance for American customers in the form of lower loans, compensation, and debt cancellations.
