CFPB Plans Major Layoffs Amid Shift in Focus and Leadership

WASHINGTON, D.C. — The Consumer Financial Protection Bureau (CFPB) is set to undergo significant layoffs, with over 1,500 employees receiving reduction-in-force notices as the agency shifts its focus under the Trump administration. This move comes as CFPB refines its approach to consumer protection amid criticisms of its previous strategies.

Sources familiar with the situation confirmed to FOX Business that the layoffs will impact various core functions within the CFPB, including its enforcement arm. After the cuts, the agency will retain just over 200 personnel to continue its regulatory activities.

According to a memo circulated among CFPB staff by chief legal officer Mark Paoletta, the restructuring aims to emphasize “tangible harm to consumers” by reallocating resources from enforcement and supervision. The memo highlighted that the agency’s supervisory exams would be reduced by 50%, focusing on “conciliation, correction and remediation of harms subject to consumers’ complaints.”

The incoming priority will be on depository institutions, a return to the agency’s original focus from 2012, where 70% of supervision was on traditional banks and only 30% on nonbanks. Currently, the balance has inverted, with over 60% of supervision directed at nonbanks.

“We will focus our anti-fraud efforts on areas that show material and measurable consumer damages, as opposed to matters based solely on perceptions of ‘wrong’ consumer choices,” the memo stated.

The new directive identifies mortgages as the top priority, followed by addressing violations related to data furnishing, debts, fraudulent overcharges, fees, and lax consumer information protections. Furthermore, the CFPB indicated it will step back from engaging with areas where state regulators have significant jurisdiction unless legally mandated, thereby eliminating overlapping regulatory functions.

“We will not pursue supervision under novel legal theories and will direct our efforts toward issues clearly within our statutory authority,” the memo added.

Among the areas that will be deprioritized by the CFPB are initiatives aimed at helping justice-involved individuals, medical debt, peer-to-peer lending platforms, remittances, and certain aspects of consumer data and digital payments.

Currently, the CFPB is led by Acting Director Russell Vought, who also heads the Office of Management and Budget (OMB). The nominee for the permanent director position, Jonathan McKernan, awaits Senate consideration. McKernan previously served on the board of directors for the Federal Deposit Insurance Corporation (FDIC).

Activists have voiced their discontent regarding the Trump administration’s proposed cuts at agencies like the CFPB, raising concerns about the implications for consumer protection.