The efforts of the Trump administration to disassemble the Consumer Financial Protection Bureau (CFPB) are allegedly being examined by the inspector general of the Federal Reserve, according to a new report.
According to CNBC on Thursday, June 12, the administration’s efforts to fire the majority of the CFPB’s employees and terminate the agency’s contracts are being examined by the Office of the Inspector General, an independent watchdog that regulates the Federal Reserve and the CFPB.
The article reported that the office wrote to Senators Elizabeth Warren and Andy Kim on June 6th, requesting an investigation into the legality of such measures and how they would impede the CFPB’s purpose.
“We ask that the CFPB Office of Inspector General (CFPB OIG) identify the specific contracts terminated; determine whether the termination of those contracts complied with applicable federal laws, regulations, and agency policies and procedures; and assess the monetary and operational impact of the terminations, including a review of the terminations’ impact on the CFPB’s ability to perform its statutory duties,” the lawmakers wrote.
Per the report: “As Trump dismantles vital public services, an independent OIG investigation is essential to understand the damage done by this administration at the CFPB and ensure it can still fulfill its mandate to work on the people’s behalf and hold companies who try to cheat and scam them accountable,” Kim told CNBC.
In that letter seen by CNBC on June 6, the inspector general’s office informed Sen. Andy Kim, D-N.J., and Sen. Elizabeth Warren, D-Mass., that it was considering their request to look into the actions of the consumer agency’s new leadership. The Office of the Inspector General (OIG), contacted by PYMNTS, declined to comment on the findings.
In the letter—in response to an earlier request from lawmakers—acting Inspector General Fred Gibson said: “We had already initiated work to review workforce reductions at the CFPB. We are expanding that work to include the CFPB’s canceled contracts.”
Senators Sound Off as Trump Admin Makes Waves
According to the article, the Government Accountability Office (GAO) promised to evaluate the administration’s actions at the CFPB in April after Warren and Kim requested that it do so.
The letter affirms that since Russell Vought, Trump’s acting CFPB director, took over in February, important oversight agencies of the U.S. government are now looking into the flurry of activity at the bureau. While he and representatives from Elon Musk’s Department of Government Efficiency attempted to terminate contracts with outside suppliers and lay off the majority of the agency’s employees, Vought ordered workers to stop working.
This led Warren and Kim to request that the GAO and the Fed Inspector General examine whether Vought’s activities were lawful and how much they interfered with the CFPB’s purpose.
Warren and Kim stated in a series of letters sent in April that they wanted an investigation to make sure the CFPB could continue to carry out its legally mandated duties in the wake of the administration’s attempts to undermine it. Also in April, the GAO informed the lawmakers that it would look into the issue.
“Specifically, we ask the CFPB OIG to determine whether such actions were taken in accordance with all relevant federal laws and regulations and the extent to which they have impacted the agency’s ability to fulfill its mission and its statutorily required functions,” the U.S. senators wrote in one of the letters.
In an April letter to Kim, the GAO stated that it would carry out the study they requested, but that the work would be “within the scope of its authority” and that it would communicate with the OIG to make sure it wasn’t repeating itself.
Cara Petersen, the CFPB’s Interim Director, resigned from her position, according to reports on Tuesday, June 10. Petersen stated that the agency’s leadership “has no intention to enforce the law in any meaningful way.”
Straight away—after taking office in January—President Donald Trump announced a regulatory freeze, which stopped any pending and recently finalized CFPB rules from going into effect.
Further, President Trump also fired more than 17 inspector generals from federal agencies shortly after taking office. Michael Horowitz, the Justice Department’s IG since 2012 and this month’s new inspector for the Fed and CFPB, was left out of that purge. Trump supporters allegedly commended Horowitz, who starts his new position at the end of this month, for exposing issues with the FBI’s management of its investigation into Trump’s 2016 campaign.
Meanwhile, a federal appeals court’s impending ruling will determine the CFPB’s future. Judges temporarily blocked Vought’s attempts to fire staff, but they are currently evaluating the Trump administration’s petition about its agency intentions.
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