Is Trump's plan to take down CFPB hurting his allies?

The turmoil within the CFPB has caused speculation amongst Trump allies, particularly Russell Vought, who heads the Office of Management and Budget and acts as the director of CFPB. According to sources familiar with the situation, there are concerns that the lack of discipline within DOGE could compromise efforts to weaken the agency. The fear is that the erratic actions of Elon Musk’s team could face legal challenges, potentially allowing a robust CFPB to remain unscathed. Despite these reports, a spokesperson for Vought dismissed any claims of tension, calling the story false and attributing it to personal vendettas against DOGE.

Here are the key points surrounding the CFPB controversy:

Vought, a key figure in Project 2025 aiming to eliminate the CFPB, swiftly halted the agency’s operations upon assuming control. He halted supervision and regulatory activities, as well as ongoing litigations and internal communications among staff members.
Elon Musk’s team at DOGE has reportedly terminated around 200 of the agency’s 1,700 employees, with restrictions in place for those remaining. Working out of the basement, DOGE officials seemed unaware of the agency’s responsibilities.
Mark Calabria, former head of the FHFA, steps in temporarily until Jonathan McKernan takes over as the permanent CFPB director. His role involves aligning independent agencies with the OMB’s control.
Calabria’s stance on the future of the CFPB emphasizes a shift towards enforcement and obligations in the mortgage industry. While he acknowledges the agency’s enduring presence, he highlights distinctions between the Biden administration’s focus on redistribution and social engineering.

In a recent ruling, a federal judge granted the Trump administration the authority to dismiss federal employees in agencies like the CFPB, redirecting the case to the Federal Labor Relations Authority.

As the CFPB undergoes significant changes, the future of the agency remains uncertain. The clash of ideologies and power struggles within its corridors will undoubtedly shape how it operates in the impending months. It is imperative for stakeholders and observers to monitor these developments closely to anticipate the impact on the financial sector and regulatory landscape. Let us remain vigilant and engaged as this narrative unfolds.