CFPB warns staff of upcoming layoffs due to GOP funding cuts

• Key Insight: Congress passed the president's massive tax and spending bill in July that lowered the maximum amount of funding the CFPB can request from the Federal Reserve System.
• Supporting Data: This year, the CFPB's budget is capped at $446 million, a 43% drop from last year's $785.4 million maximum funding.  
• Forward Look: Firings spurred by GOP budget cuts could happen even as the CFPB's union is challenging mass firings by the Trump administration.
  

The embattled Consumer Financial Protection Bureau plans to fire a large number of employees because President Trump's budget slashed the bureau's funding in half.
On Wednesday, the CFPB sent an email notifying its staff to expect upcoming reductions in force, or RIFs, imposed by a Republican funding cap that lawmakers approved in the budget bill that President Trump signed in July. 

The email notified employees to prepare for "workforce optimization," or layoffs, because of the the president's tax and spending bill that capped the amount of funding that the CFPB can receive from the Federal Reserve System's operating budget at 6.5% — down from 12% previously. 

"The CFPB must continue to evaluate workforce optimization opportunities to align with congressionally-mandated funding levels since the bureau's transfer cap from the Federal Reserve was revised from 12% to 6.5% per year," according to the email obtained by American Banker. "This evaluation includes considering a possible reduction in force action."

The National Treasury Employees Union said the crisis over the CFPB's funding was created by acting CFPB Director Russ Vought. The union sued the CFPB in February to halt mass firings.

"This is a manufactured crisis by Russ Vought who failed in his duties as acting Director by refusing to request the funds necessary for the CFPB to fulfill its statutory obligations," said  Jasmine Hardy, chapter vice president of CFPB Union, NTEU 335, in an email. "Everyday Americans defrauded and scammed by big banks and corporate bad actors will suffer as a result."

It is unclear how many employees could be fired, or which ones would be retained. 

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The CFPB is funded through the Federal Reserve System rather than congressional appropriations. It's fiscal 2025 is capped at $446 million, down from $785.4 million last year. The bulk of the bureau's budget pays for employee salaries. 

Vought requested zero funding in the CFPB's fiscal third quarter, citing a large existing balance. CFPB employees, who declined to be named for this story out of fear of retaliation, say the email has heightened fears that the agency could run out of money soon.

The pending mass firings come amid a contentious legal battle between CFPB leadership and the NTEU, which represents the CFPB's unionized employees. Last month, a federal appeals court ruled against the union, allowing Vought to fire up to 90% of the bureau's staff. That ruling is on hold pending an appeal by the union. The union has 45 days to file a request for an en banc hearing before the full court. The injunction halting mass firings remains in effect until after a ruling. 

In the first sentence of the email to employees, the CFPB described the court case and why it hasn't fired staff yet.

"On Friday August 15th, the United Stated [sic] Court of Appeals for the District of Columbia vacated a preliminary injunction on CFPB efforts to restructure the organization. The bureau will not restructure until the plaintiffs have had a chance to ask the full D.C. Circuit to review the case and the mandate vacating the injunction formally issues." 

The email asks CFPB employees to update their resumes and send them to management.
It was signed by the CFPB's Office of Human Capital.

"As the CFPB evaluates options, the Office of Human Capital (OHC) advises that you proactively review your personal records for accuracy," it states. Employees are advised to update a copy of their resume by Sept. 25, "to ensure that employees' retention rights are followed in the case of a RIF."

In a reduction in force, retention rights refer to guarantees that employees with time in federal service will be retained over more junior colleagues.

The CFPB's management is asking for updated resumes to build a register of employees who will be ranked based on tenure, military preference, total years in federal service and performance, according to CFPB employees. An evaluation of retention rights will allow some staff to potentially return to a previous position if their jobs are eliminated. 

Since the CFPB was created as part of the Dodd-Frank Act of 2010, Republicans have sought to cut the agency's funding and reduce its broad reach. Vought has stopped nearly all supervision and enforcement of large banks with over $10 billion in assets, and has eliminated oversight of nonbanks as part of the effort to gut the agency. 

The median salary of CFPB employees is roughly $121,000, versus the average federal employee salary of roughly $106,000. That higher average compensation is largely attributable to the large number of attorneys at the agency, who generally command higher pay. 

In addition, Vought has been billing the CFPB $4.7 million a year for a personal security detail due to alleged threats against him, which was first reported in July by Government Executive. Though Vought has a primary job as the director of the Office of Management and Budget, the CFPB is reportedly footing the bill for his security detail through an interagency agreement. No previous director required a security detail.