CFPB to Lay Off 90% of Staff Following Court Ruling, Sparking Legal Backlash

The U.S. Consumer Financial Protection Bureau (CFPB) is set to terminate approximately 90% of its workforce, cutting around 1,500 jobs and retaining only 200 employees. The decision follows a recent federal appeals court ruling that gave the Trump administration broad discretion over staffing levels at the agency. Created after the 2008 financial crisis, the CFPB is the only federal agency with oversight over nonbank financial institutions such as mortgage lenders and payment service providers.

Mass termination notices began circulating Thursday afternoon, with affected employees told their access to internal systems would be cut off by Friday evening. The firings target key divisions, including enforcement and supervision, significantly reducing the agency’s operational capacity. Legal advocates and employee unions swiftly filed an emergency motion, arguing the CFPB’s move violates court orders mandating individualized assessments before any layoffs and jeopardizes its statutory duties.

The Trump administration, supported by billionaire adviser Elon Musk, has long criticized the CFPB for what it calls politicized enforcement. Although early plans aimed to eliminate the agency entirely, officials later clarified it would continue in a reduced form. A new director has since been nominated.

Consumer advocates warn that slashing the agency’s workforce without proper procedure undermines legal safeguards for American consumers. Democratic Senator Elizabeth Warren, the agency’s original architect, condemned the decision, calling it an attack on democratic institutions. Since its founding, the CFPB has secured $21 billion in financial restitution for consumers. The White House has not issued a comment.

As the agency faces escalating legal battles and public scrutiny, critics argue that dismantling the CFPB leaves Americans vulnerable to financial exploitation, reversing hard-won protections in the wake of the last economic crisis.