CFPB allowing some offices to resume functions
The Consumer Financial Protection Bureau (CFPB) is allowing some offices to resume their functions, as the Trump administration faces a legal challenge over its stop work order and other efforts to overhaul the consumer watchdog.
Mark Paoletta, the CFPB’s chief legal officer, emailed employees Sunday clarifying they still should be performing statutorily required work. Several offices at the agency since have received authorization to resume their work, according to a trove of emails filed in court Tuesday.
“These measures were intended to ensure that new leadership could establish operational control over the agency while ensuring that it would continue to fulfill its statutory duties,” Paoletta wrote. “Many of you understood this and continued to perform functions required by law and sought approval from me to perform work, which I have promptly granted.”
“It has come to my attention, however, that some employees have not been performing statutorily required work,” he continued. “Let me be clear: Employees should be performing work that is required by law and do not need to seek prior approval to do so.”
After acting CFPB Director Russell Vought was appointed in early February, he initially directed employees to cease “all supervision and examination activity” and “shareholder engagement.”
However, he quickly expanded his order days later, telling agency staff to “stand down from performing any work task” unless they received approval from Paoletta. Employees were also told not to come into CFPB headquarters, and the building’s lease was later cancelled.
As CFPB staff attempted to comply with the work stoppage, confusion emerged over whether they could send emails, attend meetings with other agencies or, for the legal division, review certain documents, the emails show.
Employees also appeared unclear whether they could perform statutorily required activities.
In an email last week, the associate director of the Office of Fair Lending asked if they were permitted to perform statutory functions, such as supporting fair lending examinations and enforcement activity and completing a report for Congress.
The team responding to records requests under the Freedom of Information Act at the CFPB similarly asked for permission to continue its work, noting it was required by law and halting the work posed a “risk of litigation.” Both requests were approved.
Adam Martinez, the CFPB’s chief operating officer, also emailed staff in the Division of Research, Markets and Regulations last week, saying it wanted “to ensure that you are aware that statutorily required work and/or work required by law are authorized.”
He sent a similar missive to the team handling supervision at CFPB. However, he also confirmed that Vought’s order to cease all supervision and examination activity was still in force.
Following Paoletta’s Sunday email, the supervision team sought clarification from Martinez, who responded that the newest directive “does not change the specific work stoppage” laid out in Vought’s initial email.
As a result, Cassandra Huggins, the principal deputy assistant director of Supervision Policy and Operations, sent out an email to supervision staff Monday.
She noted that Paoletta’s message “was not intended to authorize the reinstatement of supervision/examination activity, even though the Bureau is required by law to carry out these activities.”
In a lengthy response to Huggins and supervision staff, Paoletta slammed the email, emphasizing that all CFPB staff are authorized to perform statutorily required work.
“I am concerned that you sent out an internal agency communication on such an unfounded basis that is false and directly contradicts my March 2nd message without first getting confirmation directly from me,” he wrote.
“Your actions severely undermine the Agency leadership’s ability to supervise the agency staff and to ensure that statutorily required duties are being performed,” Paoletta added.
Huggins responded, noting that she “did not intend to undermine the new administration’s ability to supervise agency staff.”
“[M]y only intention was to ensure that our staff did not act against the direction in the February 8 email from Acting Director Vought to cease all supervisory and examination activity,” she said.
Other actions taken by the new CFPB leadership have also sowed confusion. After the agency’s social media accounts were deleted in early February, staff warned that they might be in violation of records retention requirements, the emails show.
The issue was compounded by a push to terminate more than 100 contracts, one of which held backup records of the CFPB’s social media.
The emails were submitted as part of a lawsuit brought by the National Treasury Employees Union, which represents CFPB staff, and several outside groups. They have accused the Trump administration of attempting to dismantle the agency.
Administration lawyers have denied the allegations that they plan to eliminate the CFPB, emphasizing President Trump’s nomination of Jonathan McKernan for CFPB director. The Senate Banking Committee voted to advance McKernan’s nomination Thursday.
However, CFPB employees have pushed back on the administration’s claims. In a series of court declarations last week, staff said they were told by officials that they plan to “wind down” the agency, eliminating all but five employees and transferring its statutorily required functions to other agencies.
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