As the Consumer Financial Protection Bureau faces unprecedented upheaval under the Trump administration, three developments this week illustrate the breadth of change confronting the agency — from internal investigations being dismantled, to external political moves to defund it, to pressure-driven restitution finally reaching harmed consumers.
“Death Memos” Signal Wind-Down of Enforcement and Supervision
CFPB examiners and enforcement attorneys have been directed to draft memos on pending investigations, which are being widely viewed inside the regulator as precursors to closing them out entirely, according to a published report. These memos, dubbed “death memos” by staff, come as acting CFPB Director Russell Vought and his team seek to eliminate the majority of the agency’s 1,700-strong workforce.
The new directive prohibits examiners from contacting supervised companies, severely hampering their ability to verify remediation efforts. Simultaneously, Vought has ordered a 50% reduction in supervision events and has shifted the agency’s focus back to large banks, arguing this will reduce business costs and lower consumer prices.
Meanwhile, enforcement attorneys are being asked to write similar memos about open cases, with expectations high that many will be dropped. Roughly 20 enforcement actions from the Biden era have already been dismissed, and proposals in court filings indicate the administration plans to cut enforcement staff by 75%.
Senate GOP Moves to Strip CFPB Funding
The Senate Banking Committee is moving forward with legislation that would end the CFPB’s automatic funding through the Federal Reserve, forcing the agency to rely on congressional appropriations. The bill also targets Federal Reserve employee pay, capping it at 70% of FDIC levels for certain non-monetary roles.
Framing the changes as necessary accountability measures, the Senate is seeking to roll back key provisions of the Dodd-Frank Act that insulated both the CFPB and the Fed from political pressure. The bill also seeks to eliminate several other agencies and redirect existing funds, but it still must clear Senate rules and gain House support.
After Pressure from Attorneys General, CFPB Releases Long-Delayed Restitution
The CFPB has finally begun distributing $4.2 million in restitution to victims of Prehired LLC’s predatory training and debt collection program after 12 state attorneys general pushed the agency for answers.
A 2023 court order directed restitution to over 660 harmed consumers, but the CFPB had paused updates on its progress earlier this year. Following the letter from the attorneys general, the Bureau confirmed that checks are now being sent.
Prehired marketed unlicensed online training with income-share loans disguised as non-loans, promised unrealistic job outcomes, and used aggressive collection tactics. The CFPB joined states in suing the company, which ultimately led to the consumer relief agreement.
