GAO and OIG to Investigate the CFPB's Recent Staff Reductions

U.S. Sen. Elizabeth Warren (D-Mass.), on behalf of 40 Democratic senators, wrote a letter to CFPB Acting Director Russell Vought on April 28, 2025, expressing "grave concerns" about the agency's ability to fulfill more than 80 congressionally mandated functions in light of the CFPB's April 17 Reduction in Force (RIF).

Sen. Warren, ranking member of the Senate Committee on Banking, Housing, and Urban Affairs, emphasized that the agency's "hasty and unjustified" RIF, which would terminate almost 1,500 of the agency's remaining 1,700 employees, constitutes "an illegal shutdown of the CFPB that will leave it unable to conduct agency actions that are required by law." Sen. Warren went on to highlight the fact that the remaining 200 CFPB employees would be left to run all agency operations specifically to "supervise and examine large financial institutions across the country, respond to millions of consumer complaints, answer the phone for hundreds of thousands of people seeking help and monitor emergency financial risks."

The Trump Administration has faced challenges to its attempt to scale back the scope of the CFPB on several fronts. The agency, created as part of the Dodd-Frank Act in the wake of the 2008 financial crisis, is a congressionally established agency. Although agency directors have discretion in how to conduct day-to-day operations, the CFPB is required to perform more than 80 statutory functions. Maintaining the staff to perform the agency's required functions is a critical responsibility, and though the CFPB's goal is to eliminate unnecessary roles, Sen. Warren, as well as CFPB directors from both Republican and Democratic administrations, expressed that "it is not possible for the CFPB to perform all of its statutorily required functions with a staff of 200 people."

Sen. Warren and the Democratic members of the Senate Banking, Housing, and Urban Affairs Committee requested that Vought and the CFPB provide the following information by May 7, 2025:

• a detailed accounting of the more than 80 statutory obligations of the CFPB
• the number of employees assigned to each of statutory functions as of December 2024
• the number of employees who would be assigned to each function if the "rushed reduction in force" were to be implemented
• the immediate impact of the RIF on the agency's ability to perform each statutory function consistent with federal law and federal court orders
• copies of any individualized or particularized analysis of those planned reductions on the agency's work

Sen. Warren's letter to Vought comes days after the U.S. Government Accountability Office (GAO) agreed to "review matters relating to the recent actions undertaken at the [CFPB], including efforts by the Department of Government Efficiency (DOGE)." The GAO, a legislative watchdog agency, agreed to conduct an investigation into the Trump Administration's recent actions after Sens. Warren and Andy Kim (D-N.J.) requested a comprehensive review.

The Office of the Inspector General of the Federal Reserve (OIG) will also conduct a separate investigation into the CFPB's unlawful shutdown, as announced by Rep. Maxine Waters (D-Calif.) on May 5, 2025. Rep. Waters, ranking member on the U.S. House Financial Services Committee, requested the GAO and OIG investigate the "unlawful and unilateral shutdown of the [CFPB]" alongside Reps. Al Green (D-Texas) and Bill Foster (D-Ill.) on March 3, 2025. Rep. Waters sought the "robust investigation by each of [the] offices" after Chairman French Hill (R-Ark.) disregarded several requests to hold a hearing regarding the efforts to eliminate the agency.

These new commitments from the GAO and OIG come on the heels of the House Financial Services Committee's recommendation that more than 60 percent of the CFPB's budget be eliminated for the upcoming fiscal year, as Holland & Knight previously reported. Though the GAO has yet to announce the specific scope of this investigation, the OIG will focus on questions related to data access and information security at the CFPB.

The GAO and OIG, at the request of Senate and House Democrats, are the latest to become involved in the effort to investigate and curtail the CFPB's attempts to utilize RIFs as a means to dismantle the agency. On April 18, 2025, U.S. District Court for the District of Columbia Judge Amy Berman Jackson enjoined the CFPB from implementing the recent RIF and categorized it as one "that will decimate the agency and render it unable to comply with its statutory duties." Days after Judge Jackson's order, the U.S. Court of Appeals for the District of Columbia Circuit also enjoined the CFPB from conducting any RIFs, pending appeal, as Holland & Knight previously reported.

Visit Holland & Knight's resource center, CFPB Dispatch: Legal Updates and Insights, to stay on top of the latest CFPB developments.