A Three-Judge Panel’s Decision to Restructure the Consumer Financial Protection Bureau and the Trump Administration’s Indictment of Ruling Out the Reduction in Force Action

Employees at the Consumer Financial Protection Bureau have begun receiving layoff notices, the latest attempt by the Trump Administration to shrink the bureau and reduce the scope of its work.

“I regret to inform you that you are affected by a reduction in force (RIF) action,” says a notice reviewed by The Verge that was sent by CFPB Acting Director Russell Vought to an agency employee. RIF action is necessary to restructure the Bureau’s operation to better reflect its priorities and mission. The notice says employees will be placed on administrative leave until the official end date because access to the system will be cut off after Friday.

After a court ruling cleared the way for layoffs, force notices have been reduced. The three-judge panel said the bureau’s leaders can send a reduction in force notice to employees they have determined to be unnecessary to carry out CFPB’s statutory duties.

The panel otherwise left intact a separate federal judge’s injunction that prevents the agency from being dismantled — including that its data cannot be deleted or destroyed, and that employees must be given workspace or the tools to work remotely.

The bureau’s legal officer argued in the memo that the agency can focus more on harms to consumers by using more supervised states.

He said the bureau would prioritize certain areas it has dealt with in the last few years.

The last item is notable as Elon Musk, who has tweeted “CFPB RIP”, is building a digital payments platform –- a platform that would ostensibly be under CFPB’s oversight. In February, Musk’s Department of Government Efficiency (DOGE) team entered the bureau’s Washington headquarters and took control of key systems.

The CFPB, which was founded in the wake of the 2008 financial crisis, has become a target of the Trump administration as well as some in Silicon Valley and on Wall Street, who say it overreaches in its regulation.

Consumer organizations criticized the bureau’s reorientation as described in Paoletta’s memo, saying it marked a significant retrenchment in its mission.

The National Consumer Law Center (CFPB) argues that Congress is not the Right Place for the Consumer Protection Responsibilities and Acts of Congress

The National Consumer Law Center believes that the CFPB can’t shirk consumer protection responsibilities because they are given by Congress.

is a senior policy reporter at The Verge, covering the intersection of Silicon Valley and Capitol Hill. She spent 5 years covering tech policy at CNBC, writing about antitrust, privacy, and content moderation reform.

Fox Business reports that around 1,500 workers will receive RIF notices across core functions, based on an unnamed source. The Wall Street Journal reported that the Chief Legal Officer of the bureau, Mark Paoletta, sent a notice on Thursday night stating that the bureau would shift resources away from enforcement and supervision that could be done by the States.

The union that brought the original complaint to stop the agency from being gutted filed a motion late Thursday asking the court to require the government to explain how the mass terminations don’t violate its preliminary injunction. The filing states that the offices that are mandated by law will be either eliminated or reduced to a single person. “It is unfathomable that cutting the Bureau’s staff by 90 percent in just 24 hours, with no notice to people to prepare for that elimination, would not ‘interfere with the performance’ of its statutory duties, to say nothing of the implausibility of the defendants having made a ‘particularized assessment’ of each employee’s role in the three-and-a-half business days since the court of appeals imposed that requirement.”

Sen. Elizabeth Warren (D-MA), the top Democrat on the Senate Banking Committee who helped establish the agency, called the agency’s “dismantling” of the agency “yet another assault on consumers and our democracy by this lawless Administration, and we will fight back with everything we’ve got.”