CFPB Faces Turmoil One Year After Trump’s Return to Office
One year after Donald Trump returned to the presidency, the Consumer Financial Protection Bureau (CFPB) faces significant challenges. The suspension of work for CFPB employees highlights the agency’s ongoing turmoil.
CFPB’s Turmoil Under Trump Administration
Since early 2025, the CFPB has been under immense strain. Employees, including longtime attorney Lisa Rosenthal, received orders to cease all operations. As a result, many staff members found themselves in a situation where they could not work but were not officially on leave.
In February 2025, Trump appointed Russell Vought as acting director of the CFPB. Vought is also director of the Office of Management and Budget and has been a vocal critic of the agency he now leads. He has expressed views suggesting the CFPB overreaches and punishes small lenders.
Impact of Leadership Changes
Under Vought’s leadership, the CFPB underwent drastic changes. In April, around 1,400 employees who remained were given layoff notices, drastically reducing the workforce. The National Treasury Employees Union intervened, halting the layoffs through a legal injunction.
- CFPB ordered to stop operations in early 2025.
- Russell Vought appointed as acting director.
- 1,400 employees received layoff notices in April 2025.
- Legal injunction put a pause on layoffs.
Budget Cuts and Funding Battles
The CFPB’s budget was slashed nearly by half in July 2025 through the One Big Beautiful Bill Act. The Trump administration argued that the CFPB, funded by the Federal Reserve, could not receive allocations due to the Fed’s financial losses.
In response, a coalition of state attorneys general filed a lawsuit against the administration. A District Court judge ruled in December that Vought must request funds, rejecting the administration’s claims about the CFPB’s funding.
Consumer Protection Gap
Despite ongoing challenges, some operations have resumed. However, complaints to the CFPB surged by 89% in December 2024, raising concerns about the agency’s ability to address consumer issues effectively. Current agency leadership claimed they were unwinding overreach initiated by the previous administration.
Critics like Norbert Michel from the Cato Institute voice concerns about the CFPB’s potential dismantling, calling for an official congressional decision rather than administrative action.
State and Local Efforts to Fill the Void
In the absence of the CFPB’s usual functions, some state officials have stepped in to enforce consumer protection laws. For instance, Capital One agreed to pay $425 million following an agreement with New York Attorney General Letitia James.
Former CFPB director Rohit Chopra noted that state attorneys general are stepping up efforts to protect consumers in the current climate. However, he emphasizes that they cannot fully replace the function of a well-resourced federal agency.
Affordability Concerns Amid CFPB Changes
Julie Margetta Morgan, a former associate director at the CFPB, criticized the Trump administration for sidelining the agency while claiming to address affordability issues. She pointed to previous CFPB rules aimed at protecting consumers from excessive fees that were later repealed.
As the CFPB’s functions have been curtailed, the current administration’s commitment to addressing affordability remains questionable. Questions about the agency’s capabilities linger as it struggles under current leadership.
