Controversial Consumer Financial Protection Bureau Faces Collapse as Director Implements ‘Wind Down’ Plan

The Consumer Financial Protection Bureau (CFPB), a federal agency established to safeguard consumers from financial misconduct, faces an unprecedented dismantling under its Trump-appointed leadership, according to a flurry of testimony from current and former employees. Documents filed late Thursday reveal a detailed plan to “wind down” the agency, terminate nearly all of its 1,700 employees, and erase its operational footprint.

The move is consistent with Trump’s long-standing vow to dismantle the Dodd-Frank. In the days after his election in 2016, NPR reported the president-elect said he would “get rid of” the legislation he blamed for stifling banks and economic growth. This commitment, rooted in his broader deregulation agenda, led to a partial rollback of Dodd-Frank in 2018.

In a series of statements submitted in Case 1:25-cv-00381-ABJ, employees allege that the agency’s COO Adam Martinez, alongside operatives from Elon Musk’s Department of Government Efficiency (DOGE), orchestrated a rapid closure of the CFPB.

“My team was directed to assist with terminating the vast majority of CFPB employees as quickly as possible,” said Alex Doe, a pseudonymous employee fearing retaliation. Doe described a three-phase plan: first targeting probationary and term employees, followed by approximately 1,200 additional layoffs, and concluding with the agency’s near-total dissolution within 60-90 days.

Another employee, Blake Doe, corroborated these claims, noting Martinez’s intent to shift the CFPB into “wind down mode,” transferring its functions to other agencies and returning its funds. Drew Doe painted an even starker picture, recalling meetings between February 18 and 25 where senior executives declared the CFPB would be reduced to “a room at Treasury, White House, or Federal Reserve with five men and a phone in it.”

Adam Scott, the CFPB’s Director of Digital Services, confirmed that “the decision to delete the homepage was made by [OMB Director Russ Vought], and it was not an error,” with repair authorizations denied, cutting off consumers’ primary access point. Meanwhile, Charlie Doe, a contracting officer, described a chaotic rush to terminate essential contracts, risking irreparable data loss and violating standard protocols.

Former employees echoed these concerns. Erie Meyer, the CFPB’s Chief Technologist, warned of “mishandled data retention practices” and the “mass cancellation of cyber-security contracts,” leaving consumer data vulnerable in defiance of a court order.

The CFPB’s legal mandate — to protect consumers from predatory financial practices — appears abandoned, according to Enforcement Director Eric Halperin, who detailed the “severe curtailment and unraveling of enforcement operations” with lasting consequences. Supervision Director Lorelei Salas called the halt of statutorily required supervision activities “unprecedented,” while General Counsel Seth Frotman labeled Martinez’s public statements “inaccurate or misleading.”

The CFPB was created in the wake of the 2008 financial crisis. Signed into law on July 21, 2010, as part of the sweeping overhaul of financial regulations known as the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) under President Barack Obama, the agency was ostensibly aimed to consolidate consumer protection efforts previously scattered across federal entities. Championed by then-Harvard professor Elizabeth Warren, it began operations in 2011 with a mission to regulate banks, credit unions, and other financial institutions, ensuring transparency and fairness for consumers.

However, CFPB’s short history has been fraught with legal battles, often centered on its structure and authority. Critics, including Republican lawmakers and industry groups, have long challenged its single-director model and dubious funding mechanism, which draws from the Federal Reserve rather than congressional appropriations. In 2020, the Supreme Court ruled in Seila Law LLC v. CFPB that the president could remove the CFPB director at will, affirming its constitutionality but fueling ongoing debates over its independence.

In early February, the National Treasury Employees Union (NTEU) filed suit, securing a temporary restraining order against Director Vought’s closure efforts. Peyton Diotalevi, NTEU National Counsel, documented the mass termination of 200 term employees and the closure of CFPB offices, noting an auto-reply from Human Resources signaling “impending separation” for remaining staff. A tentative agreement with the Justice Department, as recounted by attorney Deepak Gupta, has paused contract cancellations until a March 3 hearing.

Meanwhile, the shutdown’s effects are already being felt by its supporters. Juanita West-Tillman, a former NAACP Pasadena branch secretary and Altadena fire victim, said, “The CFPB played a critical role in shielding NAACP members from predatory schemes.” Christina Coll of the CFPB Employee Association warned of continued harm to workers, while Brian Shearer, head of the Office of Policy Planning, called the dismantling “atypical” compared to past transitions.

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Christina Botteri is the Executive Editor of The Tennessee Star and The Star News Network. Follow her on X at @christinakb.