The Consumer Financial Protection Bureau is weighing significant workforce reductions after Congress imposed new limits on its funding, creating uncertainty about the agency’s ability to cover payroll as the new fiscal year begins next month, according to a published report.
Driving the news:
- In an internal email this week, the CFPB’s Office of Human Capital said it is evaluating “workforce optimization opportunities,” including a reduction in force (RIF).
- Staff were urged to update resumes in case their positions are eliminated.
- Acting Director Russell Vought has twice attempted to cut up to 90% of the agency’s workforce since February, but courts halted both efforts.
- Hundreds of staff have left in the meantime, but the agency still carries significant payroll obligations.
Context:
- The CFPB is funded through the Federal Reserve, not Congress. But a GOP-led tax-and-spending package signed into law July 4 capped the bureau’s draw at 6.5% of Fed expenses, down from 12%.
- That cut slashed the CFPB’s maximum available budget from $823 million to $446 million for fiscal 2025.
- The agency had budgeted roughly $525 million for salaries and benefits this year, which is already higher than what will be available under the new cap.
- A federal appeals court has ruled the CFPB can proceed with its plan to reduce the size of its workforce by 90%. That ruling is still pending further appeals by the union representing CFPB employees.
The big picture: Republicans have long criticized the CFPB as exceeding its authority and using enforcement as a political tool. Supporters, including consumer advocates, warn that shrinking its workforce would undermine protections for borrowers and oversight of financial institutions.
What’s next:
- The agency cannot proceed with a large-scale reorganization until courts resolve ongoing litigation brought by employee unions.
- In the meantime, leadership is weighing whether to proceed with targeted staff reductions to align with its new budget ceiling.
