Trump's CFPB Overhaul Leaves Consumers Exposed—Here's What It Means For Your Money

New testimony reveals the Donald Trump administration planned to fire “the majority” of the Consumer Financial Protection Bureau’s employees before a federal judge intervened, according to ABC News.

The agency’s chief operating officer, Adam Martinez, testified in court for six hours about the dismantling of the financial watchdog, providing an inside look at the confusion that followed when the Department of Government Efficiency took control of the agency in early February, ABC reported.

“I was having a hard time processing what was happening,” Martinez told the court, describing how officials canceled contracts only to hurriedly reinstate some after realizing certain functions were legally required.

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Judge Amy Berman Jackson, who temporarily halted the takeover in February, characterized the approach as “shoot first and ask questions later” during Monday’s hearing as she considers issuing a preliminary injunction to prevent further dismantling of the agency.

The turmoil began when acting director Russell Vought ordered CFPB’s roughly 1,700 employees to “stand down from performing any work task” without explicit clearance and closed the agency’s Washington offices, according to CNBC.

About 200 probationary employees were dismissed immediately.

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Consumer advocates warn that weakening the CFPB leaves Americans vulnerable to financial industry abuses. Created after the 2008 financial crisis, the agency has secured $20 billion in relief for consumers, according to CBS News, and imposed $5 billion in penalties against businesses violating protection laws.

“If you have a mortgage or a bank account or a credit card—and virtually everybody's got a credit report—the lack of a watchdog to make sure that you are protected and safe in your financial activities is going to have devastating effects,” Lauren Saunders, National Consumer Law Center associate director, told CNBC.

Several consumer protections now hang in limbo. According to CNBC, the CFPB has already dropped four lawsuits against financial firms, including one against Capital One COF for allegedly misleading customers about savings account interest rates. Planned payouts to consumers—including $100 million for student loan borrowers—are on hold.

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Martinez testified that some critical services were nearly lost during the takeover. “There were a couple of high-priority issues that would have been devastating had it stopped,” he said, according to ABC, expressing concern about the Consumer Response Center, which handles public complaints against financial institutions.

The Trump administration maintains it aims to “right size” the agency rather than eliminate it entirely, and has nominated a permanent director, according to CNBC. However, Martinez acknowledged discussing mass terminations despite the court’s order, saying “there really isn’t going to be a CFPB now” when “ripping out a number of people and functions.”

Financial experts warn that without robust CFPB oversight, consumers must become their own watchdogs, checking credit reports and bank statements more diligently.

“Consumers don’t take the time to read the fine print,” Mark Hamrick, an analyst at Bankrate, told CNBC. “That’s why we have regulators, to do the work that consumers can’t do themselves.”

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