The CFPB could be the latest agency on Elon Musk's chopping block
The new Trump administration is continuing to take a sledgehammer to federal agencies and programs, with a key mortgage industry regulator the latest bureau to face the wrath of chief government efficiency enforcer Elon Musk.
Acting Consumer Financial Protection Bureau (CFPB) head Russell Vought ordered the agency’s employees not to come into the office or perform any work tasks this week, while leading officials Eric Halperin and Lorelei Salas resigned this week after being placed on administrative leave.
The bureau, the US’s leading watchdog for consumer protection in the mortgage space, may well be doomed. Last Friday, Musk posted “CFPB RIP” followed by a gravestone emoji from his X account, the latest broadside in his longstanding grudge against the agency.
Flanked by Musk at the Resolute desk yesterday, Trump inked a fresh executive order requiring federal agencies to make big hiring cutbacks and slash payrolls when the current sweeping freeze is lifted.
His administration has already dangled an offer for federal employees to resign now and remain salaried until September, although a federal judge issued a temporary block on that plan while weighing up whether it’s legal.
Will the federal government cull damage the US economy?
Trump’s plans to cull a massive percentage of the federal workforce could have huge repercussions for the national economy and employment outlook, according to Investment Company Institute chief economist Shelly Antoniewicz (pictured top).
She told Mortgage Professional America that while plenty was still up in the air about the proposal, it could shape up to be one of the most significant factors affecting the US’s economic performance in 2025.
Brendan McKay talks of the vital role the CFPB plays in stabilizing the mortgage industry, despite its flaws. He emphasizes that, while it’s not without challenges, the agency’s presence prevents economic collapse and ensures industry stability. https://t.co/82Q1WdRek8
— Mortgage Professional America Magazine (@MPAMagazineUS) February 4, 2025
“It’s a clear priority to reduce the size of the federal workforce. How those people integrate back into the private sector and where they go, how quickly, and what the volume of that is going to be, could have an impact on the unemployment rate, could have an impact on payroll, could have an impact on consumer spending,” she said.
“It depends upon how it’s structured and how fast [the layoffs] happen. Right now, the way it’s structured it would be gradual in the sense that people are paid through September. So they would still have income. They would still be able to pay their bills, make their rent or their mortgage payments, still be able to have discretionary spending and search for another job during that time.”
But Trump seemingly intends to push ahead with the federal workforce cuts even if federal employees want to keep their jobs – and if the current legal standoff ends and his team is able to enforce further redundancies, that could have a more severe negative economic impact, Antoniewicz said.
“If it happens faster, where you have fewer people that take that offer and they do mass layoffs of people, then you could have a bigger shock,” she noted.
CFPB’s shuttering draws ire of Dem Senators
The decision to rein in the CFPB’s activities drew condemnation from Democratic lawmakers including Senator Mark Kelly, who said the move would prove a harmful one. “There’s no good reason to dismantle the CFPB, which protects Americans from getting defrauded by big banks and scammed by criminals,” Kelly wrote on X.
Senator Elizabeth Warren, meanwhile, said at a Senate Banking Committee hearing Tuesday that the move would leave Americans open to exploitation by the nation’s largest banking lenders. “If the CFPB is not there examining these giant banks to make sure they are following the laws on not cheating consumers, who is doing that job?” she said.
Federal Reserve chair Jerome Powell, who was being questioned at the hearing, confirmed that the CFPB was the only regulator monitoring whether banks are complying with rules to prevent deceptive practices towards consumers.
The bureau was founded in 2011 in an effort to curb predatory lending in the US following the global financial crisis. But Musk suggested last November that it should be “deleted”, while Trump said Monday that the bureau was “set up to destroy people” as his administration’s efforts to roll it back continued.
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