The Consumer Financial Protection Bureau’s Curious Resurgence

The Trump administration seemed on the verge of shutting down the Consumer Financial Protection Bureau earlier this year after trying to fire its staff, terminating its office lease, ending nearly all its work and refusing to fund it.

But now, with efforts to dismantle the agency held up in federal courts, it appears to be coming back to life, with Acting Director Russell Vought using it as an instrument to carry out conservative policies.

In recent weeks, the White House nominated a veteran of the CFPB in the first Trump administration, Brian Johnson, as director. The agency leased new office space in Southwest Washington and called back employees who had been working from home. It's also ramping up supervision of small financial institutions that serve low-income communities and has released a rule that makes it harder for immigrants to get loans.

The agency, created by Congress after the 2008 financial crisis to protect consumers from corporate abuse, has long been a target of Republicans, who have criticized it as the brainchild of liberal Sen. Elizabeth Warren and argue that it has been too aggressive in supervising companies.

CFPB spokesperson Rachel Cauley said Vought’s actions are “bringing the agency back to operating within statute and away from breaking the law,” and right-sizing enforcement to correct for the “thuggery” of previous administrations.

Cauley did not make either Vought or Johnson available for comment.

Vought, who is also White House budget director, has said the agency was weaponized by past administrations to target small financial institutions.

In his first months as director, he tried to terminate 90 percent of the staff and refused to ask for new funding. Both actions remain indefinitely blocked by federal courts after states, consumer advocacy groups and CFPB employees sued.

In April, Vought tried again, releasing a plan to shrink the agency by more than half. That, too, was held up in court in June.

But Vought did manage to end the lease on the CFPB’s headquarters near the White House and dropped or settled nearly all its outstanding enforcement actions against large corporations. The agency made all work virtual — including bank supervision, which is typically done on-site at companies — and announced that all supervisors must take a “humility pledge” before engaging with any company or institution.

According to internal notices seen by POLITICO, CFPB employees will be returning to a new, smaller office space over the summer for mandatory in-person work at least two days a week. All employees — including those in far-flung regional offices — will be required to be in person by Sept. 6. Earlier this week, out-of-town employees were told they have only two weeks to decide whether to make the move.

The recent actions have left workers at the agency uncertain about the future.

“We were approaching normalcy again,” said a current staffer, granted anonymity to discuss sensitive matters. “We thought that maybe we had worn them down. But the latest plans came out, and it was clear that nothing had fundamentally changed.”

The CFPB has begun issuing supervisory requests to Community Development Financial Institutions, government-backed small lenders focused on underserved communities. The Trump administration has sought to defund the institutions, and Vought himself has worked to withhold their funding, despite objections from Congress.

It set new guidance on who qualifies for mortgages and credit cards, making it harder for immigrants to get access to financing. It also put out guidance to curb debanking, or the practice of depriving certain borrowers of loans, a political bugbear for Republicans. It even overhauled its website, removing guidance materials and records of past enforcement actions against large corporations.

“The Biden-Harris-Chopra regime was weaponized against political enemies and disfavored industries, and used novel legal theories and secret justifications to ruin lives and businesses,” said Cauley, the CFPB spokesperson, referring to former President Joe Biden, former Vice President Kamala Harris and former bureau director Rohit Chopra.

But those actions, particularly the CDFI supervision, are confusing to consumer advocates and current staffers, given Vought’s previous claims.

“Vought has said publicly that we are going to stop targeting these ‘mom and pop type shops,’ small lenders and small financial institutions. But that just feels like the opposite of what is happening — it feels like all they care about is letting off the big corporations, and targeting small lenders,” said a staffer who recently left the agency and was granted anonymity to discuss internal conversations among staffers.

In June, the White House nominated Johnson, a Capital One executive and a former CFPB deputy director, to replace Vought at the agency.

One person who worked with Johnson at the CFPB during the first Trump administration said that the nomination adds to fears that the agency may be weaponized: In pasttestimony, Johnson has criticized the agency’s enforcement, called for a more narrow view of its authority and argued for its funding to be reduced.

Still, it’s unclear what Johnson’s approach will be.

The Consumer Bankers Association, a trade group, praised his “tenured background steeped in consumer protection policy.” Consumer advocates, on the other hand, have generally opposed the nomination.

“You have someone who is both steeped in the minutiae of how the agency works and also ideologically committed to being industry’s voice in the policymaking process,” said Mike Pierce, executive director at Protect Borrowers, a consumer advocacy group.

If Johnson is confirmed by the Senate, the former colleague frets that the recent direction — new rules, enforcement of select institutions — will continue. “There will be no supervision anymore of big financial institutions, and the agency will punch down at specific organizations,” said the person, who no longer works at the agency and was granted anonymity to speak freely.

Others fear that Johnson will close it down.

“Here comes the next hatchet man to try to finish the job and cut the agency,” said Warren, a Massachusetts Democrat who helped set up the bureau during the Obama administration before she was elected to the Senate.

According to a person familiar with CFPB leadership’s thinking, Johnson’s nomination, the new office space, and the stalled reduction-in-force plan further the administration’s goal of winding down the agency.

The person told POLITICO that Vought and Johnson are “extremely close,” having both previously worked under former Rep. Jeb Hensarling (R-Tex.), and that they are of “one mind” on the future direction of the CFPB.

The new office is not large enough to accommodate the staff, even if the courts allow job cuts to go into effect, which suggests that requiring out-of-town staff to come in could be a way to shrink the workforce. At the same time, the court hearings on the agency’s workforce reductions will likely not take place until early September, around the time that employees would already have had to move to Washington.

“Why would someone in a [regional office] move their family to D.C. with the knowledge they could get RIFed shortly after?” said the former employee, who was there at the time of the announcements.

The reduction-in-force plan, meanwhile, would have disproportionately affected enforcement and supervision division staffers, many of whom are based outside Washington and near the companies they monitor. They will be most affected by the return-to-office policy.

The regulation and legal divisions, however, would stay around the same size.

Critics see the structure of the job cuts and Johnson’s appointment as a sign that the agency is becoming friendlier to the finance industry.

Earlier this month, the CFPB announced that Bilt Rewards, a financing company, had complied with the bureau’s directives to compensate consumers who had filed complaints.

The announcement was unusual, according to former CFPB staffers. Typically, the bureau only issues announcements for formal enforcement actions. If it uses supervision to deal with a company in trouble, rather than issuing a formal enforcement action, those interactions generally remain confidential.

Because Bilt was not the target of a public enforcement action, some critics see the announcement as a way to protect the company.

“This message appears primed to fend off private lawsuits and criticisms from the Hill and state attorneys general,” said Pierce at Protect Borrowers.

Bilt has been aligned with the administration in the past. In January, following Trump’s call for a 10 percent credit card interest rate cap, which lawmakers and the banking industry opposed, Bilt released a one-year 10 percent card offer.

According to Sean Walsh, chief communications officer for Bilt, the company was already working to address consumer complaints and engaged with members of both political parties while doing so.

"Bilt's mission is to help all Americans build a path to homeownership, while rewarding renters and homeowners alike for their largest monthly expense — housing,” said Walsh.

According to a social media post from Vought, the announcement was meant to showcase a new, business-friendly approach to oversight.

“Immediate consumer redress without years of waiting. No thuggery. New model based on common sense,“ he wrote on X.

It is unclear how Johnson will approach supervision. Critics fear the plan is to use the agency’s regulatory and legal staff to water down rules with few supervisors to hold companies accountable.

“It remains to be seen whether [Johnson] intends to enforce the law or will just continue with the Trump administration’s unlawful efforts to shut down an agency created by Congress,” said Brad Lipton of the progressive Roosevelt Institute, formerly a staff attorney and adviser at the CFPB.

“Hope springs eternal that maybe the new leadership will take the job seriously again, but the evidence is not looking good,” said Lipton.