The inspector general of the Federal Reserve is currently investigating the Trump administration’s efforts to lay off virtually all employees of the Consumer Financial Protection Bureau (CFPB) and terminate various contracts associated with the agency, as reported by Finance Newso.
According to a letter dated June 6, the inspector general’s office acknowledged to Senators Elizabeth Warren and Andy Kim that it was proceeding with their request to look into the recent actions taken by the CFPB’s new leadership. Acting Inspector General Fred Gibson indicated that the investigation into workforce reductions was already underway in response to prior requests from lawmakers and would now also encompass the cancelled contracts related to the bureau.
This development highlights that essential oversight entities are scrutinizing the rapid changes occurring at the CFPB since Russell Vought, the acting head of the bureau appointed by Trump, assumed control in February. Vought instructed staff to cease their work, while collaborating with personnel from Elon Musk’s Department of Government Efficiency to execute major layoffs and discontinue contracts with external partners.
In light of these moves, Senators Warren and Kim have urged the inspector general and the Government Accountability Office (GAO) to examine the legality of Vought’s initiatives and assess how they might impede the CFPB’s primary objectives. The GAO informed the senators in April that it would also investigate the situation.
Senator Kim expressed the necessity for an independent investigation by the inspector general, emphasizing that understanding the repercussions of the Trump administration’s actions at the CFPB is vital to ensuring the agency can effectively advocate for consumer protection and hold businesses accountable for malpractices.
The Federal Reserve’s Inspector General’s office operates as an independent watchdog over both the Federal Reserve and the CFPB, possessing the authority to review agency records, issue subpoenas, and interview staff members. The office can also escalate criminal findings to the Department of Justice.
Following his inauguration, Trump dismissed over 17 inspectors general across various federal departments. However, Michael Horowitz, who has served as the Department of Justice’s Inspector General since 2012, was not among those fired and has recently been appointed to oversee the Fed and the CFPB starting at the end of the month. His work in identifying issues related to the FBI’s investigation into Trump’s 2016 campaign reportedly earned him commendations from Trump’s supporters.
Additionally, the future of the CFPB is contingent upon a forthcoming ruling from a federal appeals court. Although judges have temporarily stalled Vought’s attempts to carry out the layoffs, they are currently deliberating the administration’s appeal concerning its strategic plans for the agency.
