Under a workforce reduction announced on April 18, the Consumer Financial Protection Bureau (CFPB) may be left with just one employee in the Office of Fair Lending and Equal Opportunity, along with an 80% reduction in enforcement staff and a 90% cut in supervision personnel – divisions that most directly impact mortgage lenders.
Details of the mass layoffs– which would affect 1,400 of the Bureau’s 1,700 employees – were disclosed in a court filing in the district of Columbia by Mark Paoletta, a former congressional staffer and White House veteran who now serves as general counsel of the Office of Management and Budget under the Trump administration.
For now, the job cuts at the CFPB are on hold. U.S. Judge Amy Berman Jackson temporarily blocked the terminations and scheduled a hearing for later this month.
In the court filing, Paoletta claimed that CFPB leadership found “many instances in which the Bureau’s activities have pushed well beyond the limits of the law.” Paoletta also criticized the Bureau for what he called “intrusive and wasteful fishing expeditions” into private companies, overstepping its jurisdiction into areas like peer-to-peer lending and rent-to-own, and duplicating enforcement efforts already covered by state regulators.
“For example, the Bureau has conducted many enforcement and supervision actions on the basis of mere statistical disparities without the slightest evidence of intentional discrimination,” Paoletta wrote.
A legal expert told HousingWire that the filing — presented as a justification for the layoffs — offers conclusions without detailed analysis. Congresswoman Maxine Waters (D-CA) applauded the judge’s decision to “block” the attempt to lay off nearly all of the agency’s employees.
“Under the lawless Trump Administration, financial institutions are free to scam, exploit, and abuse consumers so long as it boosts their profits. But just as we did in the D.C. District Court the first time, Democrats will keep fighting to block these harmful and unlawful actions,” Waters said in a statement.
The (potential) CFPB cuts
According to the plan, the CFPB’s Director’s Office, which houses the Office of Fair Lending, would be reduced to just five employees from 86. The enforcement division would shrink to 50 from 248, with the Bureau shifting its focus to “tangible consumer harm” and deferring more oversight to state regulators.
Paoletta wrote that the cuts were developed by him and two CFPB attorneys after leadership concluded that the Bureau could fulfill its 87 statutory duties — including 13 that require specific offices — as a “smaller, more efficient operation.”
In making this assessment, leadership “discovered vast waste in the agency’s size,” Paoletta wrote. “All divisions, but especially enforcement, supervision, consumer response, operations, research, markets, and regulations, and the Director’s office contained far more employees than are necessary to fulfill the Bureau’s statutory duties and discretionary functions.”
Below is a list of the cuts by Division or Office:
(by number of employees)
1 – Consumer Response Education Division: from 149 to 20
Reason: The Bureau retains dozens of contractors to field consumer complaints;
2 – CFPB Centralized Services: from 5 to zero
Reason: This is not a statutorily required function;
3 – Director’s Office: from 86 to five
Reason: The Office of Minority and Women’s Inclusion, the Office of Fair Lending and Equal Opportunity and the Deputy Director are required by statute, but their statutory functions could be performed by one person. In total, five employees would be sufficient for the Director’s Office;
4 – Enforcement Division: from 248 to 50
Reason: Reduced in line with the Bureau’s new policy of focusing on tangible consumer harm and deferring to State enforcement actions;
5 – Supervision Division: from 487 to 50
Reason: In line with the Bureau’s new policy of reducing the quantity and scope of supervision matters. All personnel will concentrate in the Southeastern region due to proximity to headquarters and relatively lower cost of living;
6 – External Affairs Division: from 41 to two
Reason: The only statutorily required component is the Community Affairs Unit, which could be performed by one person. Another employee was retained to engage in private sector engagement;
7 – Legal Division: from 87 to 27
Reason: It’s not required by statute and 27 employees are sufficient to perform support functions for the Bureau;
8 – Operations Division: from 323 to 30
Reason: It’s not required by statute but it brings administrative operations, finance and human capital, among others. The CIO position was eliminated but these personnel levels are sufficient for the preservation of data;
9 – Research Monitoring and Regulations Division: from 230 to 22
Reason: The division includes offices of service members affairs, financial protection of older Americans, private education loan ombudsman, which are statutory but can be performed by one person.
10 – Ombudsman’s Office: from four to one
Reason: It’s required by statute but Paoletta determined that “One employee could fulfill the statutory duties.”
11 – Office of the Director’s Financial Analysts: from 29 to zero
Reason: It’s not required by statute.
The document indicates that the job cuts could continue – pending court approval.
“As the above indicates, the Bureau could have reduced beyond the levels it ultimately decided upon while still performing its statutory duties,” the court document states. “Leadership will continuously assess the Bureau’s workforce needs and assess and adapt and make appropriate changes to ensure compliance with statutory duties and account for changing circumstances.”
