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Consumer Financial Protection Bureau employees ordered to 'stand down'

By Debra Cassens Weiss

February 13, 2025, 9:46 am CST

Employees at an agency established to protect consumers against wrongdoing by financial institutions have been ordered to “stand down” and stop activities, leading to the resignations of top officials.

The employees at the Consumer Financial Protection Bureau got the directives in a series of emails beginning last weekend from Russell Vought, the acting CFPB director, and from Mark Paoletta, the chief legal officer at the Office of Management and Budget, report Bloomberg Law and Law360 (here and here).

Employees were ordered to stay away from the agency’s Washington, D.C., headquarters for a week. There are new enforcement priorities, staff members were told, and attempts to move forward on cases would be considered “insubordination.”

Vought also revealed that he would not seek funding from the Federal Reserve for the next quarter.

“The moves appear to be a prelude to essentially shuttering the CFPB, following a playbook that was deployed to stop operations at the U.S. Agency for International Development,” Bloomberg Law reports.

Lorelei Salas, the CFPB’s supervision director, and Eric Halperin, the CFPB’s enforcement director, resigned Tuesday, citing an inability to do their jobs, Law60 reports in another story.

The orders “left in limbo” significant cases that began in the Biden administration, Reuters reports. They include lawsuits accusing Capital One of misleading consumers about savings accounts, accusing Walmart of forcing delivery drivers to use accounts with junk fees to get paid, and accusing banks of failing to protect consumers from fraud on the Zelle payment network.

The union that represents CFPB employees has filed two suits, Axios reports. One challenges the stop-work directive, while the other seeks to block access to employee information by the Department of Government Efficiency.

President Donald Trump has named Jonathan McKernan, a board member of the Federal Deposit Insurance Corp., to serve as the CFPB’s new director, the New York Times reports. Bartlett Naylor, a financial policy advocate for Public Citizen, a nonprofit consumer rights advocacy group, said in a statement McKernan has “a history of serving senators bent on hobbling the CFPB.”

Tesla CEO Elon Musk, who is leading the Department of Government Efficiency, celebrated on his social media platform X, formerly known as Twitter.

“CFPB RIP,” he wrote after Vought’s appointment as interim chief, adding an emoji of a tombstone.

The Washington Post and the New York Times point out that Musk is building a new digital wallet called X Money that will allow X users to send money to others. Such payment platforms “have come under intense scrutiny by the Consumer Financial Protection Bureau,” the New York Times reports.

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