Key insights
- The Trump administration is proposing a significant workforce reduction at the CFPB, particularly impacting supervision and enforcement divisions. While not an outright elimination as previously pursued, the reduced oversight could lead to increased risk-taking by financial institutions, potentially creating future instability. The immediate market impact is limited, but the long-term implications for consumer finance and regulatory oversight are negative.
WASHINGTON, April 1 (Reuters) - President Donald Trump’s administration has developed a fresh plan to slash the workforce at the U.S. Consumer Financial Protection Bureau by about two thirds, stepping back from earlier efforts to get rid of nearly 90% of all employees, court documents showed.
In a filing submitted Tuesday evening to the U.S. Court of Appeals for the District of Columbia Circuit, the Justice Department said the new plans showed the administration will not shut down the CFPB entirely, as a lower court had found they planned to do. CFPB representatives did not immediately respond to requests for comment. * Under the new plan, the CFPB workforce would fall to 556workers, fewer than a third of its size when Trump took office,and it would eliminate 85% of positions in the Division ofSupervision, which oversees the conduct of banks and nonbankfinancial companies offering consumer services, and 80% inenforcement. * The Justice Department said a lower court should beallowed to consider lifting a stay that currently blocks theadministration from carrying out this plan. * The administration had been battling in court until nowfor permission to eliminate nearly all CFPB positions, somethingthat lawyers for an employee union and others had argued wouldbe illegal and would prevent the agency from fulfilling dutiesmandated by Congress, which created the agency in 2010. * Trump and other top officials had called for the CFPB’soutright elimination, accusing it of politicized enforcement andunduly burdening companies, something advocates had rejected asan illegal giveaway to politically connected corporate actorsthat would jeopardize the public. * Tuesday’s motion would pause a pending appeal before thefull bench of the appeals court, where judges had appearedskeptical of administration arguments that courts do not havethe power to block the government from firing virtually all CFPBworkers.