CFPB Faces Challenges in Tumultuous Year Under Trump’s Leadership: NPR

The Consumer Financial Protection Bureau (CFPB) has faced substantial challenges since early 2025, largely attributed to the Trump administration’s aggressive efforts to diminish its role. Following an unprecedented work stoppage, the agency wrestled with budget cuts, layoff orders, and a significant reduction in its operational capabilities.

Context of the CFPB Challenges

Created in 2010 in the wake of the 2008 financial crisis, the CFPB was established to protect consumers from fraud and financial malpractice. Spearheaded by Democratic Senator Elizabeth Warren, the agency consolidated consumer protection efforts under one umbrella, extending its supervision and rule-making authority.

Financial Impact Since Inception

• The CFPB has returned approximately $19.7 billion to consumers since its inception.
• Ineffective funding strategies and management decisions have led to operational challenges as of 2025.

Leadership Changes and Work Stoppages

In February 2025, Trump appointed Russell Vought as acting director. Vought is also the director of the Office of Management and Budget and has been a vocal critic of the CFPB. One of his first actions was to instruct employees to cease all work, effectively halting much of the agency’s operations.

Staff Layoffs and Legal Challenges

The situation intensified in April 2025 when around 1,400 employees received layoff notices, leaving a skeleton staff of about 200 workers. This resulted in a legal challenge from the National Treasury Employees Union. A District Court ordered a temporary injunction to suspend the layoffs and the deletion of essential records, while these legal matters are still unresolved.

Budget Cuts and Ongoing Litigation

Congress enacted severe budget cuts, reducing the CFPB’s funding by nearly 50% in July 2025. The administration then argued that due to the Federal Reserve’s financial status, CFPB funds could not be allocated. A coalition of state attorneys general responded with a lawsuit, and a judge later supported the CFPB by rejecting the administration’s argument and ordering Vought to seek the necessary funds.

Declining Consumer Protection Efforts

• The CFPB has reported a dramatic increase in consumer complaints, up 89% in December compared to the previous year.
• Various essential functions have been curtailed, raising concerns about consumer protections.

Emerging State-Level Responses

With the federal agency’s functions limited, some state attorneys general have begun to step in to fill the void. Notably, New York Attorney General Letitia James led an investigation against Capital One, resulting in a $425 million restitution agreement for consumers misled about interest rates.

Conflicting Policies on Affordability

Critics of the administration, including former CFPB director Rohit Chopra, argue that while state officials work to protect consumers, they cannot replace a fully functional federal agency. Julie Margetta Morgan, a former CFPB associate director, highlighted the contradiction in the Trump administration’s policies—proclaiming affordability goals while simultaneously dismantling crucial consumer protections.

Conclusion

The CFPB remains in a precarious situation, with funding and operational capabilities severely undermined. As legal battles over staff layoffs and funding continue, the gap in consumer protection has become increasingly apparent. The future of the CFPB will depend on court outcomes and potential legislative solutions to restore its original mission of protecting consumers.