Updated 7:07 AM EST, Saturday, Feb. 15.
The plan to annihilate the Consumer Financial Protection Bureau (CFPB) has been far more calculated than the plan to ensure smooth market functioning during a regulatory prolapse induced by President Trump to break down the federal government.
On Friday, federal judges ruled quickly on a Thursday court filing on behalf of unions representing CFPB employees and others across the federal government. A consent order blocks the agency tasked with protecting consumers from firing employees for reasons unrelated to their work performance or conduct.
The Trump administration is also blocked from diverting funding away from the agency. However the injunction resolves, call this first round of legal challenges a probe for the radical constitutionalist Acting Director Russel Vought, who remains in charge as Tuesday's nomination of Jonathan McKernan pends.
The unions' filing claims that Vought is planning to terminate 95% of the Bureau’s employees, “another mass layoff that may occur imminently — as early as today or tomorrow,” that being Friday, the filing read.
“That would make it impossible for the Bureau to fulfill any of its statutorily required functions,” the union for the Bureau’s employees warned. The CFPB’s fiscal year 2024 financial report, published in September, indicated the Bureau had more than 1,750 employees at the time.
These moves have left the mortgage industry scrambling to countenance the reality that state attorneys general (AGs) and state regulators may soon be forced to fill the regulatory void created by a defunded, depopulated, and deactivated CFPB.
The CFPB has not responded to a request for comment on recent reports and actions taken.
On February 11, Vought fired 70 probationary employees and canceled $100 million of contracts with companies that enable the CFPB to perform core functions, from processing consumer complaints to litigation, supervision, and enforcement.
Acting Director Vought replaced Trump-appointed Treasury Secretary Scott Bessent two days after Bessent had taken the interim role from Biden-era CFPB Director Rohit Chopra. Fired on Jan. 31, Chopra lasted 11 days longer in the Trump administration than most thought he would.
The same day, Trump nominated regulatory veteran Jonathan McKernan to hold the permanent office of CFPB Director. The Consumer Financial Services Law Monitor called McKernan “an ally of the financial services industry,” making him appear like a regulatory olive branch.
McKernan’s time as senior counsel for policy at the Federal Housing Finance Agency (FHFA), conservator of the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac, directly overlapped with the COVID-19 pandemic. He served in the position from Oct. 2019 to Jan. 2021, per his LinkedIn.
As McKernan’s nomination pends and actions taken across the federal government to freeze funding, fire workers en masse, and eradicate programs seen as not in alignment with the administration’s ideological extremism face court challenges, Acting Director Vought charged on with his marching orders this week.
On Wednesday, February 12, Vought cut off the CFPB’s statutorily mandated consumer complaint channel, severing one of the Bureau’s most vital connections with the consumers who submit hundreds of thousands of complaints through that channel monthly.
Vought has also reportedly informed the General Services Administration (GSA) that they are terminating the lease on the CFPB’s Washington D.C. headquarters.
