CFPB Allows Some Operations to Resume Amid Legal Challenge

The U.S. Consumer Financial Protection Bureau (CFPB) has authorized several of its offices to resume work, reversing aspects of its abrupt shutdown last month. According to Reuters, the decision follows a legal battle over the agency’s work stoppages, which critics argue effectively dismantled the consumer watchdog.

The authorizations, which began last Thursday, came after the CFPB assured a court that it remained committed to fulfilling its legal obligations and did not intend to cease operations. Per Reuters, the agency faces allegations from an employee union and consumer advocates who claim it is being unlawfully shut down. As of Wednesday, CFPB representatives had not responded to requests for comment.

The National Treasury Employees Union, representing federal workers, along with consumer advocates, has sought a court order to block what they describe as an attempt by the Trump administration to dismantle the agency through halted operations, canceled contracts, and widespread layoffs. They argue that federal officials lack the authority to suspend congressionally mandated functions at will.

Related: Court Order Temporarily Halts U.S. Consumer Financial Protection Bureau Layoffs

Emails released under a federal judge’s order late Tuesday revealed confusion among CFPB staff regarding shifting directives. According to Reuters, this uncertainty was particularly evident in the supervision division, which had been explicitly ordered to stop work last month. While a senior official indicated that financial institution oversight had ceased, the agency’s chief legal officer, Mark Paoletta, insisted that legally mandated activities could proceed and requested an inventory of ongoing work.

Since assuming control in February, Acting CFPB Director Russell Vought had instructed employees to halt work unless explicitly required by law. His directive also mandated pre-approval for any tasks and led to the cancellation of more than 170 service contracts, affecting enforcement and supervision divisions, among others. Additionally, a government-associated social media account surfaced, inviting the public to report CFPB enforcement and supervisory staff engaging in work.

However, on Sunday, Paoletta sent an agency-wide message acknowledging that some employees had not been conducting legally required work. He invited staff to seek authorization for necessary tasks. According to Reuters, between Sunday and Monday, he approved the resumption of work across multiple CFPB offices, including Financial Education, Research, Monitoring and Regulation, Consumer Response and Education, and External Affairs.

Source: Reuters