Consumer watchdog CFPB staff faces mass layoffs, reports say

This story has been updated. Details here. 

The Trump Administration has sent layoff notices to a large percentage of the staff at the Consumer Financial Protection Bureau (CFPB), according to press reports. Also, a federal judge in Washington has scheduled a hearing today on the fate of the agency.

About 1,500 of the roughly 1,700 employees of the agency received layoff notices yesterday, The New York Times reports. The notices said the layoffs would be effective today and would affect virtually every department, including those dealing with student loans, medical debt, digital payments and peer-to-peer lending. Some departments would be reduced to one person, a union official said.

Consumer advocacy organizations condemned the plans. 

“Sabotaging the CFPB by firing almost 90% of its remaining civil servants who protect Americans from corporate crime is hardly the ‘individualized’ or ‘particularized’ assessment that the court required the CFPB to undergo,” said Erin Witte, director of consumer protection for the Consumer Federation of America, in a prepared statement. 

“This is a reckless move that will leave millions of Americans more vulnerable to financial fraud and abuse,” said National Consumers League VP of Public Policy John Breyault. “With only about 200 personnel left to oversee the financial marketplace, the Bureau’s effectiveness will be severely compromised at a time when scams, identity theft, and predatory lending are on the rise.

"This is yet another attempt by this administration to dismantle one of the most effective consumer protection watchdogs in the federal government.” 

The agency was created by Congress in 2011 to act as the "cop on the beat" for financial issues that affect consumers, in the words of its primary sponsor, Sen. Elizabeth Warren (D-MA). Since its creation, the bureau has returned $21 billion to consumers who were defrauded or short-changed, according to official government records.

"Ordering a reduction in force order contradicts the views of Americans who have repeatedly expressed strong bipartisan support for financial protection and the CFPB,” said Adam Rust, director of financial services for the Consumer Federation of America. “We have a CFPB because excessive risk-taking by corporations caused millions of people to lose their homes, businesses, and life savings.

"By saving people $21 billion since the CFPB’s inception, the dedicated staff at the agency have demonstrated the value they bring. They deserve respect – not to be subject to extremist attacks on their livelihoods inspired by the whims of billionaires. The only winners here are predatory lenders, surveillance Big Tech firms, fraudsters, and financial institutions that want to profit at our expense.”

Court hearing looms

The notices hit just one day before U.S. Disrict Court Judge Amy Berman Jackson has scheduled a hearing today, seeking to determine whether the government has compied with her earlier order to stop dismantling the agency.

She ordered the government to produce a witness "with personal knowledge" of the scope of the layoffs and the Trump Administration's plans for the future of the bureau.

In February, the bureau was in the process of laying off a reported 1,200 employees when Jackson issued an injunction blocking mass firings or layoffs.