The news: The Trump administration just tried to fire over 1,400 of the 1,700 Consumer Financial Protection Bureau (CFPB) employees, per Wired. But a federal judge blocked the administration from immediately moving forward with plans, per AP News.

How we got here: In February, CFPB employees were directed to stop all supervision, enforcement, rulemaking, investigations, and public communications. Final rules’ effective dates were suspended. 

And following an appeals court ruling allowing firings with “individual assessments,” the Trump administration took its bold next step. The federal judge who blocked the terminations has scheduled a hearing for testimony about the administration’s proposed reduction in force—after which she’ll decide whether it’s allowed.

What this could mean for finservs: If the firings are eventually permitted, some CFPB departments would be fully wiped out, leaving around 200 staff who will handle legally required tasks only. Prior to the federal judge pausing these firings, CFPB leadership announced the agency will deprioritize issues like medical debt, P2P lending, student loans, consumer data protections, and digital payments. 

This means reduced monitoring and oversight in these areas, which could lead to increased predatory lending, billing errors, data misuse, and fraud—particularly affecting banking and digital payment customers.

Our take: Although finservs may welcome an indefinite break from the CFPB’s regulatory agenda, the absence of oversight could leave critical gaps exposing customers to financial harm. 

If the terminations go forward, financial institutions would have a unique opportunity—and responsibility—to step in: educating consumers on how to avoid scams, ensuring transparency, and clearly communicating the protections built into their platforms.