The Consumer Financial Protection Bureau is being sued by the City of Baltimore and Economic Action Maryland Fund, challenging the administration’s actions to defund the bureau. Adding to the turmoil, the CFPB has also fired several expert witnesses critical to ongoing cases against financial institutions accused of consumer harm, according to a published report, suggesting a broader retreat from its mission of protecting Americans from financial abuse.
What’s happening:
- Mass terminations and layoffs: Earlier this week, the CFPB informed dozens of employees, including key figures from its enforcement division, that their contracts were terminated. These layoffs come a week after Acting Director Vought issued a sweeping directive to halt all work at the agency, effectively suspending enforcement actions and halting critical consumer protection efforts. The freeze is part of a broader strategy to limit the CFPB’s impact under the Trump administration.
- Firing of expert witnesses: As part of its move to scale back enforcement efforts, the CFPB has canceled contracts with multiple expert witnesses. These experts, who were integral in cases against companies accused of harming consumers, included academics, researchers, and industry specialists who provided key testimony in legal proceedings. One expert, who spoke anonymously, expressed outrage, saying, “The richest man in the world is coming in to shut down a case where a lender is cheating working people.” These expert witnesses had been working on cases related to predatory lending and other financial scams, and their sudden removal signals the CFPB’s intent to abandon these cases under the current administration. Experts have also expressed concern about potential retaliation, with one saying, “I’m a little bit afraid of them. They could try to sue me or send an FBI agent.”
- Defunding efforts: Vought’s decision to request zero funds from the Federal Reserve for the upcoming quarter, relying instead on the CFPB’s reserve balance, is another key move in the administration’s strategy to weaken the agency. There are concerns that these reserves, amounting to approximately $711 million, could be transferred back to the Federal Reserve, leaving the CFPB without the necessary financial resources to fulfill its congressionally mandated duties. This would cripple the agency’s ability to protect consumers from financial fraud, debt abuse, and predatory lending.
- Legal pushback: In response to the growing threat to the CFPB, Democracy Forward has filed a lawsuit on behalf of the City of Baltimore and Economic Action Maryland Fund, seeking to block the administration’s actions. The lawsuit argues that by cutting off funding and transferring the CFPB’s reserves, the Trump administration is violating the Administrative Procedure Act and effectively dismantling the agency without due process. The City of Baltimore, in particular, relies heavily on the CFPB’s resources, including its consumer complaint database, to protect residents from financial abuse. The lawsuit emphasizes that the defunding of the CFPB would leave Baltimoreans vulnerable to predatory lending, financial scams, and other forms of exploitation.
What’s at stake:
- Impact on baltimore: The City of Baltimore and its Law Department have long relied on the CFPB to monitor consumer complaints and enforce fair lending practices. Without the agency, the city would be forced to divert resources from other essential functions to protect its residents from financial harm. This includes utilizing the CFPB’s consumer complaint database to track unfair practices in lending and other financial services. The loss of the CFPB’s enforcement and consumer protection capabilities would significantly impair Baltimore’s ability to serve its citizens.
- Broader implications: The Economic Action Maryland Fund also stands to be deeply affected by the defunding of the CFPB. This organization, which provides direct support to Maryland residents struggling with medical debt, housing insecurity, and financial exploitation, uses CFPB resources to inform its work. The termination of expert witness contracts and the defunding of the CFPB would not only undermine the Fund’s efforts but also leave Maryland residents at greater risk of financial abuse and exploitation.
