A federal judge Friday again temporarily paused an effort by the Consumer Financial Protection Bureau to decimate itself.

Judge Amy Berman Jackson of the U.S. District Court for the District of Columbia halted the CFPB from cutting off employees’ access to the bureau’s systems – a move that had been set for 6 p.m. Eastern time Friday as part of a reduction in force the agency’s acting director, Russ Vought, announced Thursday in memos to nearly 1,500 workers.

“We’re not going to disburse 1,483 people into the universe and have them be unable to communicate with the agency anymore until we have determined whether that is lawful or not,” Berman Jackson said at a hearing Friday.

Attorneys representing the National Treasury Employees Union asked Berman Jackson late Thursday for an emergency hearing to force the CFPB to explain how the layoffs don’t violate the preliminary injunction Berman Jackson granted last month – or, for that matter, a pared-down order an appeals court issued last week.

Three witnesses – two CFPB employees and an attorney representing the NTEU – submitted declarations to the court Friday, ahead of the hearing.

Matthew Pfaff, chief of staff at the CFPB’s Office of Consumer Response, told the court he received a notice Thursday indicating that his employment would end June 16 but that he would lose access to the CFPB’s systems – “and thus, [the] ability to work,” Pfaff said – at 6 p.m. Friday.

“This RIF action is necessary to restructure the Bureau’s operations to better reflect the agency’s priorities and mission,” Vought wrote in a memo to affected employees. The memo was included in Pfaff’s declaration to the court.

Those priorities were laid out Wednesday in a memo from the CFPB’s chief legal officer, Mark Paoletta, who said the bureau would pivot its focus away from nondepository institutions and toward “tangible harms to consumers.” In doing so, the bureau would “shift resources away from enforcement and supervision that can be done by the States,” Paoletta wrote Wednesday.

The preliminary injunction Berman Jackson issued March 28 halted any mass reductions in force. An appeals court April 11 ruled the CFPB could send a RIF notice but only when employees have been “determined, after an individualized assessment, to be unnecessary to the performance of [the] defendants’ statutory duties.”

“These RIFs appear to go well beyond what the unstayed portions of this Court’s injunction permit,” lawyers for the NTEU wrote Thursday to Berman Jackson. “It is unfathomable that cutting the Bureau’s staff by 90 percent in just 24 hours, with no notice to people to prepare for that elimination, would not ‘interfere with the performance’ of its statutory duties, to say nothing of the implausibility of the defendants having made a ‘particularized assessment’ of each employee’s role in the three-and-a-half business days since the court of appeals imposed that requirement.”

Breadth of the cuts

The cuts would leave the CFPB with a headcount of around 200, according to figures reported in September.

“Entire offices, including statutorily mandated ones, have or soon will be either eliminated or reduced to a single person,” the NTEU’s attorneys wrote in their motion Thursday, calling employees’ impending loss of access to CFPB systems a “functional work stoppage.” 

The list of affected employees cuts a wide swath across the bureau, including all of the consumer response team, except eight managers; “virtually everyone” in the research, monitoring and regulations division; everyone in supervision policy except the head of the office; everyone in supervision examinations except the office chief; everyone in the office of fair lending; virtually everyone in cybersecurity; and the legal team in the bureau’s front office, according to a declaration by Jennifer Bennett, an attorney for Gupta Wessler, which is representing the NTEU.

Pfaff gave more details as to the impact in the Office of Consumer Response, noting that “even employees who already provided notice to the CFPB of their resignation from the federal service, as well as those who accepted the deferred resignation program, received this RIF notice.”

Throughout the NTEU’s case against the CFPB, the office’s response to consumer complaints was held up as a prime example of a statutorily mandated function of the bureau.

“No leader in Consumer Response was consulted about what is needed to operate the office’s statutory duties or how the RIF would affect the complaint handling program, which is currently projected to handle more than five million complaints and more than half a million calls in 2025,” Pfaff said in his declaration Thursday. “Nearly all staff have been informed that their positions are being eliminated — including those that unambiguously align to statutory objectives and are necessary for collecting, investigating, and responding to consumer complaints.”

Pfaff said the office will shrink to a staff of eight managers from what he estimates is a headcount of 135.

“Each of those eight employees is a manager of managers who does not carry out the day-to-day tasks that permit the Office to fulfill its mandatory statutory duties,” Pfaff said.

Employee, advocate and lawmaker reactions

Other employees went public on social media.

Elizabeth Bond, a senior adviser to the CFPB’s chief technologist, received her notice while on maternity leave.

“This termination came during a time where I’m supposed to be physically recovering, bonding with my child, and supporting my own family through this transition. I’m absolutely heartbroken to see the agency I dedicated my career to be destroyed,” Bond posted Thursday on LinkedIn. “It means terrible things for all Americans.”

“No one will be protecting consumers and looking out for their best interests,” Bond told The New York Times.

Still others spoke on condition of anonymity.

"Anybody should expect a letter at any time for the rest of this administration," one CFPB staffer told American Banker. "It's the sword of Damocles." 

At least one consumer advocate – Erin Witte, the Consumer Federation of America’s director of consumer protection – cited the CFPB’s appeals court order in her statement Thursday, condemning the workforce cuts.

“Sabotaging the CFPB by firing almost 90% of its remaining civil servants who protect Americans from corporate crime is hardly the ‘individualized’ or ‘particularized’ assessment that the court required the CFPB to undergo,” Witte said. “These mass layoffs,” combined with Paoletta’s reprioritization memo from Wednesday, “provide a blueprint for would-be cheats and lawbreakers about which laws they can violate without being held accountable by our nation’s supposed consumer finance ‘watchdog.’”

Sen. Elizabeth Warren, D-MA, the architect of the CFPB who is now the ranking member on the Senate Banking Committee, lamented in a statement Thursday that the agency was “gutted.”

“Dismantling the CFPB in the face of a court order blocking an illegal shutdown is yet another assault on consumers and our democracy by this lawless Administration, and we will fight back with everything we've got,” she said.