Trump CFPB cuts reviewed by Fed inspector general

The Office of Management and Budget (OMB) Director Russell Vought has been at the center of controversy as the Trump administration attempts to lay off nearly all Consumer Financial Protection Bureau (CFPB) employees and cancel the agency’s contracts. The Federal Reserve’s inspector general is now reviewing these actions, following a request from Senators Elizabeth Warren and Andy Kim.

In a letter dated June 6, the inspector general’s office confirmed that they are investigating the workforce reductions at the CFPB and the canceled contracts. This move comes in response to concerns raised by lawmakers about the new leadership at the consumer agency, particularly acting CFPB head Russell Vought. Vought, along with operatives from Elon Musk’s Department of Government Efficiency, has been pushing to lay off most of the agency’s staff and terminate contracts with external providers.

Senators Warren and Kim have called for a review of the legality of Vought’s actions and the impact they have had on the CFPB’s mission. The Government Accountability Office (GAO) has also agreed to examine the matter, highlighting the growing scrutiny surrounding the bureau’s operations under the Trump administration.

As the investigation unfolds, Michael Horowitz, the incoming watchdog for the Fed and CFPB, is poised to take on a pivotal role in overseeing the agencies. Horowitz, who has a track record of uncovering problems within government agencies, is set to begin his new position at the end of the month.

The fate of the CFPB hangs in the balance as a federal appeals court deliberates on the Trump administration’s plans for the agency. While judges have temporarily halted Vought’s efforts to lay off employees, the administration is appealing the decision in hopes of moving forward with its restructuring plans.

Overall, the ongoing investigation and legal battles underscore the challenges facing the CFPB and the importance of upholding its mission to protect consumers. With key oversight bodies scrutinizing the agency’s actions, the outcome of these proceedings could have far-reaching implications for financial regulation and consumer protection in the United States.