Illustration by Jandos Rothstein
A remarkable set of declarations from current and former employees of the Consumer Financial Protection Bureau detail acting Director Russ Vought’s scheme to illegally eliminate the agency, and the consequences for thousands of CFPB employees and millions of consumers left vulnerable to predatory financial scams.
The fourteen declarations, filed on Thursday in National Treasury Employees Union v. Vought, provide an unusually direct window into how the Trump administration sought to cripple an agency that has returned more than $21 billion to consumers over its lifespan. And the employees call out the CFPB’s current chief operating officer, Adam Martinez, for lying in his declaration to the court that the agency is just going through a normal transition process in the transfer of political power.
The CFPB has been under a “stop work” order since Vought took over the agency on an acting basis. No work has been performed and employees are on paid leave; the order was characterized as a work stoppage to get around federal employment laws limiting administrative leave to ten days in a calendar year. Seven outstanding enforcement cases were dismissed in the past week; the latest was a case against Trans Union.
One employee, who used the pseudonym “Alex Doe” for fear of retaliation, recounted personal experience of a February 13 meeting between CFPB leadership and the Office of Personnel Management, where a three-step process was discussed. First, all probationary and “term employees” (who have a fixed term of employment) would be fired, which occurred that day. Then, entire offices, divisions, and units would be let go, a culling of roughly 1,200 employees, which was supposed to happen the next day, on Valentine’s Day. Finally, the bureau would “reduce altogether” 60 to 90 days later.
According to another declaration, the intention was to fire everyone but five statutory positions named specifically in the Dodd-Frank Act, which established the agency. “One Senior Executive said that CFPB will become a ‘room at Treasury, White House, or Federal Reserve with five men and a phone in it,’” the declaration reads.
A second pseudonymous employee who attended the February 13 meeting declared that Martinez described the CFPB as in “wind down mode,” and that all “statutorily-required functions would be transferred to other agencies.” This is illegal without an act of Congress. That employee also described an email dated February 11, where the chief financial officer of the CFPB, Jafnar Gueye, was described as discussing with the Federal Reserve how to return CFPB funds back to the central bank. (The CFPB is funded entirely through the Federal Reserve.)
“It suggests that the filings from the government in the case were deceptive at best and flat-out lies at worst.”
The intermediate step of firing 1,200 CFPB workers and shutting down entire divisions was not taken only because of the temporary restraining order in this case. Yet even after the TRO was put in place, senior executives held meetings, the declarations explain, where they made plans for the total shutdown of the agency.
“On multiple occasions, staff were told by Senior Executives that ‘the writing was on the wall’ and that ‘it was all over but the terminations,’” pseudonymous employee Drew Doe declared. “There has been no attempt internally to hide the fact that the disassembly of the CFPB continues despite the Court’s order.”
Even today, employees who message the CFPB’s human resources office get an auto-response referring to their “recent or impending separation,” suggesting that the plan for mass terminations is still operative.
According to the declarations, all of the CFPB’s buildings would be returned to the agencies where the CFPB originally leased them; signage has been taken down at the main headquarters in Washington. An email provided in one declaration states that the CFPB homepage was deliberately deleted (a 404 message currently greets visitors) at Vought’s direction, and there was no authorization to fix it.
The CFPB would exist “in name only,” according to the declarations, and everything at the building would be removed or destroyed. No data could be stored anywhere, and internal compliance with federal laws would not exist.
STEPS TO DESTROY THE CFPB have already had major consequences. For purposes of the lawsuit, the actions Vought has taken thus far mean that numerous statutory responsibilities are deliberately not being carried out. The CFPB is the exclusive federal examiner of numerous consumer protection laws and the primary enforcer of those laws. The Consumer Complaint Database, where individuals can complain about their financial transactions, is statutory and must be maintained. The student loan ombudsman is a statutory position for individuals to get assistance with their student loan issues. None of these tasks are operational, according to the declarations, along with several other statutory requirements.
Charlie Doe, a pseudonymous contracting officer, explained how nearly every contract the CFPB held with outside vendors to assist with supervision, enforcement, and multiple other tasks was terminated between February 11 and 14. This included contracts with expert witnesses in enforcement cases, without which the cases could not be litigated. It included contracts for training bank examiners, ensuring a long process of rehiring even after those functions are restored, meaning that banks and other financial institutions will not be effectively supervised, according to Lorelei Salas, the former director of supervision. It included contracts for storing and transferring data and maintaining the CFPB website. Only two contracts were retained: one for storing litigation data, and another for the database of employee financial disclosure information.
After many people noticed that the CFPB’s consumer complaint phone hotline was down, senior executives restored that contract. But the contract for the complaint database is still canceled, and employees who operate the database on a daily basis are not performing work, which means a number of functions cannot be completed.
According to Matthew Pfaff, chief of staff for the Office of Consumer Response, complaints referred by congressional offices, states, and federal agencies are not being reviewed, because there’s nobody available to review them. Complaints about companies not already in the database are not being added. Complaints with misspelled names of the companies are not cleaned up and added. Complaints with incomplete information are not being added. Pfaff estimated that 10,000 complaints are held in limbo and awaiting review. Complaints are also not being monitored after being automatically sent to companies; nobody is investigating whether companies are responding, and systems are not being maintained. And complaints that interface with other divisions of the CFPB, like the Office of Servicemember Affairs and the student loan ombudsman, are not being forwarded or worked on. Even the contract for virus scanning software on the database was canceled.
This is at odds with Martinez’s declaration that the consumer complaint database is “intact and operational.” Other declarations claimed that Martinez was not telling the truth to the court. For example, he claimed that the pause on work activities was a “common practice” during changeovers in government, but Brian Shearer, a senior CFPB official who has been there for every transition in the agency’s history, replied that “the current transition is not normal and does not appear designed to redirect the agency towards new policy priorities.” In particular, putting employees on paid leave means that the agency is paying workers to not conduct their statutory functions. The probationary layoffs are also unprecedented.
Shearer called Martinez’s statement that CFPB is still performing functions required by law “false to a significant extent,” and noted that Martinez neglected the February 10 stop-work order that superseded any claims to keep statutory functions open. Martinez also claimed that CFPB headquarters was closed for “safety” due to union protests, which Shearer claims is ridiculous, since protests are routinely held at or close to CFPB headquarters, which is near the White House.
Several declarations pointed to Martinez’s claims that, while the student loan ombudsman has been fired, consumers can use the CFPB’s regular Ombudsman Office if they have issues with student loans. But the Ombudsman Office is for individuals with complaints about the CFPB, not for those who need help with a student loan servicer or any other company. “I cannot imagine how all of this work could be continuing if the Student Loan Ombudsman position is vacant,” said Julia Barnard, the former Student Loan Ombudsman, in a declaration.
Martinez also dissembled, according to declarations, about the CFPB’s operating balance of $711 million, which he claimed was sufficient for ongoing operations. But much of that money is obligated to consumers in relief settlements, including $100 million from a settlement with student loan servicer Navient.
One declaration notes that employees raised issues with Martinez’s declarations, and were told to stop asking.
“It suggests that the filings from the government in the case were deceptive at best and flat-out lies at worst,” said Mike Pierce, a former CFPB official and executive director of the Student Borrower Protection Center, on a press call Friday. “Anybody that depends on companies to treat them fairly is at a real disadvantage in this moment. It’s terrifying.”
A declaration from Christina Coll, board member of the CFPB Employee Association, details the human toll of the plot to dismantle the bureau. She identifies one probationary employee who is unable to pay her mortgage and is relying on food banks. Another was recently diagnosed with an autoimmune condition, and has rushed testing before she loses her health insurance in mid-March as a result of her termination.
