Federal Reserve watchdog investigates efforts to dismantle CFPB

As Trump administration officials press ahead with their efforts to dismantle and defund the Consumer Financial Protection Bureau (CFPB), the Federal Reserve Office of the Inspector General (OIG) is reportedly opening an investigation into moves to fire the vast majority of CFPB and attempted cancellations of associated federal contracts.

According to reporting by CNBC, the watchdog reportedly informed lawmakers of the investigation in a letter on June 6. This came in response to an inquiry by Democratic Sens. Elizabeth Warren (Mass.) and Andy Kim (N.J.).

“We had already initiated work to review workforce reductions at the CFPB,” Fred Gibson, the Fed’s acting inspector general, wrote in the letter that was viewed by CNBC. “We are expanding that work to include the CFPB’s canceled contracts.”

The administration has moved to significantly scale back the operations and focus of the CFPB, including by dismissing a majority of its staff and even shuttering its offices in Washington, D.C. These moves were spearheaded by Russell Vought, the bureau’s current acting director and head of the White House Office of Management and Budget (OMB).

Moves by Vought and the U.S. DOGE Service — which have been part of the effort to scrutinize CFPB operations — prompted Warren and Kim to send the inquiry to the OIG in the first place. This is also in concert with a look at the activity being undertaken by the Government Accountability Office (GAO), an investigative arm of the legislative branch.

In a statement to CNBC, Kim said that losing the bureau would have an adverse impact on American consumers. 

“As Trump dismantles vital public services, an independent OIG investigation is essential to understand the damage done by this administration at the CFPB and ensure it can still fulfill its mandate to work on the people’s behalf and hold companies who try to cheat and scam them accountable,” Kim told the outlet.

Warren played an instrumental role in the establishment of the CFPB in the wake of the 2007-08 financial crisis. She advised the Obama administration on its implementation prior to entering politics herself.

But the second Trump administration has demonstrated its willingness to go after OIGs.

Within the first week of the president’s new term that started in January, he moved to purge 17 inspectors general from various departments. Spared from the purge, however, was U.S. Department of Justice (DOJ) IG Michael Horowitz, “who this month was named the incoming watchdog for the Fed and CFPB,” CNBC reported.