CFPB's Vought stops agency work, vows to cut all funding

American Banker

Russell Vought, the new acting director of the Consumer Financial Protection Bureau, has ordered the agency's staff to stop all activities and vowed to cut off funding. He also closed the bureau's headquarters next week.  

The CFPB's staff received a brief email on Sunday stating that the agency's Washington, D.C., headquarters building would be closed for a week starting on Monday. Employees and contractors were told in the email, obtained by American Banker, to work remotely "unless instructed otherwise from our Acting Director or his designee."

On Saturday night, Vought sent an email, also obtained by American Banker, to the CFPB's staff telling them to stop work on everything. Also on Saturday night, Vought posted on X that he had notified the Federal Reserve that the "CFPB will not be taking its next draw of unappropriated funding because it is not 'reasonably necessary' to carry out its duties." 

Employees were told in the email to stop work on all proposed or final rules, enforcement, investigations, settlements, formal or informal guidance — and all supervisory activities, which had not previously been affected. Vought has suspended the effective dates of all final rules and ordered the bureau "not to issue public communications of any type." 

On Saturday, the National Treasury Employees Union Chapter 335 held a protest in front of the CFPB's headquarters. 

Vought's announcement about the CFPB's funding was expected and is similar to what happened in 2018 in the first Trump administration when acting CFPB Director Mick Mulvaney requested "zero" funding from the Federal Reserve and instead used the CFPB's reserves to fund the agency.

On X, Vought wrote on Saturday: "The Bureau's current balance of $711.6 million is in fact excessive in the current fiscal environment. This spigot, long contributing to CFPB's unaccountability, is now being turned off."

And on Sunday, he posted: "The CFPB has been a woke & weaponized agency against disfavored industries and individuals for a long time. This must end." 

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Not all Republicans agree with his view. Mark Calabria, the former acting director of the Federal Housing Finance Agency and economist for Vice President Mike Pence, responded to Vought's X comment: "Reminder that the CFPB is NOT a Wall Street regulator (such remains with SEC/CFTC), it is a Main Street regulator."'

One of Vought's first actions was to pull the plug on the CFPB's landing page, which has a "404: Page not found" message. Other pages on the agency's website are working. 

In the memo telling staff to stop all work, Vought wrote: "I am committed to implementing the president's policies, consistent with the law."

Vought is an architect of Project 2025, the policy blueprint from the Heritage Foundation for overhauling the federal government. He is one of 34 authors of Project 2025's Mandate for Leadership playbook. Trump repeatedly denied during his campaign having any association with Project 2025. 

Banking experts have noted that the Project 2025 section on the CFPB acknowledges that the CFPB cannot be shut down except by an act of Congress. The playbook recommends five actions for Congress to take, including ensuring civil penalty funds not used to recompense consumers go to the Department of the Treasury and repealing Section 1071 of the Dodd-Frank Act.

Americans for Financial Reform, a consumer advocacy group, said that as a result of Vought's memo, large banks will no longer be supervised for consumer-protection laws while small, regional and community banks still will be supervised by prudential regulators.

"Thanks to Vought's orders shutting down supervision and examination, the playing field is now massively tilted in favor of the megabanks," said Carter Dougherty, an AFR spokesman. "They can do what they want while community banks still have state regulators and [the Federal Deposit Insurance Corp.] on their case."

The CFPB's media contacts could not respond to requests for comment. Vought did not respond to a request for comment. 

The Vought memo is similar to the stop-work order sent to staff on Monday by Treasury Secretary Scott Bessent, who was named the CFPB's first acting director. Bessent took over the agency on Jan. 31, shortly after being confirmed as treasury secretary on Jan. 27.  

Bessent held the job for just five days before the Trump administration installed Vought, who was named on Friday night as the CFPB's second acting director. The Trump administration was waiting for Vought to be confirmed by the Senate before naming him acting director due to a requirement of the Federal Vacancies Reform Act. Temporary heads of agencies can only be chosen from Senate-confirmed appointees or from top managers at the agency, which gave Republicans a short list from which to choose. 

Vought was confirmed by the Senate on Thursday to lead the Office of Management and Budget, where he served in the first Trump administration as a director, acting director and deputy director. The party-line vote in the Senate was 53-47. 

Several banking experts said that while there has always been a period of transition during a change of the executive branch, that this time around the second Trump administration has been more extreme. 

"The financial services industry has spent too long building compliance infrastructures only to revert back to frivolous, whack-a-mole lawsuits and inconsistent regulatory interpretations," said Joann Needleman, a member at the law firm Clark Hill who has represented banks in regulatory actions by the CFPB. Needleman was previously on the CFPB's advisory board.

Vought is expected to try to starve the bureau for funding under a novel legal theory advocated by a Harvard Law School professor that the CFPB cannot receive funding from the Federal Reserve because the central bank technically has had no earnings for the last two years. They claim the CFPB is in violation of not only Dodd-Frank but also the Constitution's Appropriations Clause. Last year, the Supreme Court sided with the CFPB in a 7-2 decision that the agency's funding is constitutional and satisfies the requirements of the Appropriations Clause. 

The Dodd-Frank Act, which created the consumer watchdog agency in 2010, states that the CFPB is to be funded through the "combined earnings of the Federal Reserve System." 

Several CFPB employees reached out to reporters saying they are fearful and feel threatened by a video of Vought vowing to traumatize the federal civil service workforce. In the video, Vought says, "We want the bureaucrats to be traumatically affected. … because they are increasingly viewed as the villains."

A CFPB staffer, who spoke on the condition of anonymity for fear of retaliation, said, "No one should feel safe in their job security. I think everyone's job is threatened. Colleagues are fearful and bracing for whatever is to come."