The termination email for a score of employees at the top US consumer watchdog arrived in the late hours of the night.
“Unfortunately, the Agency finds that you are not fit for continued employment because your ability, knowledge and skills do not fit the agency’s current needs,” dozens of probationary staffers at the Consumer Financial Protection Bureau (CFPB) were informed on 11 February.
“For these reasons, I regrettably inform you that I am removing you from your position of [job title], with the agency and the federal service [effective date],” continued the letter from Adam Martinez, CFPB’s chief human capital officer and seen by the Guardian.
The CFPB has long been known as a popular agency, one that’s recovered more than $21bn for defrauded Americans since its creation in the wake of the 2008 financial crisis. But now it faces the threat of dismantlement, and becoming the next institution under the Trump administration to potentially be rapidly hollowed out from within – a situation that could cause consumers the need to fend for themselves against predatory financial practices. More broad layoffs may be on the way.
“It’s been really stressful to potentially lose my way to support my family as the primary breadwinner,” said one of several CFPB employees who spoke on condition of anonymity due to fear of retaliation. “But the chaos that’s happening is impacting not just the bureau, but consumers and industry.”
The trouble began earlier this month, when the newly appointed acting director, Russell Vought, issued a sweeping order halting all agency operations. Staff were instructed not to perform any work tasks without explicit written approval. The agency’s headquarters was abruptly closed, its website went dark, and its social media accounts were deleted.
“This has been unprecedented,” said a second CFPB employee, who joined the financial watchdog just before Donald Trump’s first term. “No administrative tasks, no trainings, we can’t do anything. We were in the middle of exams, doing what we do. And now there are open questions about everything.”
The freeze has left both CFPB staff and the financial institutions they oversee in limbo. Ongoing examinations have been suspended mid-process. Statutory deadlines loom with no one authorized to handle them. Even routine consumer-protection functions have ground to a halt.
“Right now, they’re not allowed to proceed with any kind of court cases,” a third employee explained. “Any of these cases they’re litigating against any kind of bank is presumably going to be thrown out, which really sucks.”
The work stoppage came with a twist: the possible installation of surveillance software on employee computers just days before the shutdown, two current staffers told the Guardian.
“People are almost scared to work. There are concerns of keystrokes being monitored,” the first CFPB employee said. “No one wants to get fired for insubordination.”
“I would have it open and I’d be, like, jiggling my mouse to keep it green,” the second employee said, “if only because I’m just extremely nervous about what the consequences are of a work stoppage.”
The CFPB did not return a request for comment.
According to a court order issued on Friday, Trump’s administration came to a temporary agreement not to fire any more CFPB staff, giving workers there an 11th-hour reprieve.
In court, union representatives had said they believed the government was planning to eviscerate the CFPB, possibly as soon as the same day, beginning the process of dismissing all remaining staff, canceling the agency’s lease and returning its funds to the Federal Reserve.
Friday’s agreement is to remain in place until the court decides on their request for a preliminary injunction halting the Trump administration’s plans.
In a consent order negotiated by both sides and signed by US district judge Amy Berman Jackson, the justice department also agreed the government would not to destroy or remove any of the agency’s vast quantities of sensitive consumer and commercial data generated over the last 12 years, or transfer any of its available funds back to the Fed.
The climate of fear the Trump administration has created has only been amplified by the tech billionaire Elon Musk’s so-called “department of government efficiency” team, who were granted access to CFPB’s headquarters and computer systems. Hours after their arrival, Musk posted “CFPB RIP” with a tombstone emoji on his social media platform, X.
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The CFPB holds vast amounts of sensitive consumer and corporate data, raising serious security concerns. The bureau maintains one of the federal government’s largest consumer-complaint databases, containing millions of detailed records about Americans’ personal financial struggles, from mortgage difficulties to credit card disputes. This includes social security numbers, account details and comprehensive financial histories.
“Companies submit confidential business information, trade secrets and information about consumers,” the third employee went on. “People reveal very personal, sensitive information, and it seems like there has been very little regard towards protecting that.”
Meanwhile, the administration is preparing for even more dramatic cuts. According to legal filings from a federal workers’ union on Thursday, plans are believed to be under way to terminate more than 95% of the bureau’s employees, in effect rendering it impossible for the agency to fulfill any of its statutory functions.
Another legal filing from the union that represents CFPB employees on Friday seeks an injunction to prevent further disruption, arguing that Vought’s moves violate separations of powers by obstructing Congress’s mandate to protect American consumers.
There are fears that CFPB’s potential demise would leave a massive void in consumer protection. Over the years, some strong enforcement actions included a $120m settlement with student loan servicer Navient over illegal practices, a $175m penalty against Block’s Cash App for inadequate fraud protection and a $3.7bn order against Wells Fargo for mismanagement of auto loans, mortgages and deposit accounts.
Still, Trump has been explicit about his intentions to gut the agency. When asked whether his goal was to eliminate the CFPB entirely, he told a press pool on Monday: “I would say, yeah, because we’re trying to get rid of waste, fraud and abuse.” He added: “It was a very important thing to get rid of.”
Adding to the confusion, Trump moved to install his own pick atop the watchdog, nominating Jonathan McKernan, the former Federal Deposit Insurance Corporation board member.
McKernan, who quit his FDIC post just a day before his nomination, would potentially be moving from an agency focused on banking stability to one focused on consumer protection. He took a parting swipe at financial regulations as he left the FDIC, posting on X that he hoped it would “succeed in its mission while also reversing the regulatory overreaches of the last few years”.
The actions come despite overwhelming public support for financial protection. A September poll from Americans for Financial Reform showed that 91% of voters believe it is important to regulate financial services to ensure they are fair for consumers, including 95% of Democrats, 87% of Republicans and 88% of independents.
But the administration is looking to move ahead and dismantle the agency’s infrastructure anyway. As the future of America’s consumer financial watchdog hangs in the balance, its employees remain defiant.
“We’re the watchdogs. We do this work to protect all American consumers. It doesn’t matter who they voted for, where they live,” one staffer said. “What matters is that people have rights. There are laws to protect them, and we’re here to do the work to help protect them, and we’re not going to be bullied.”
