Banking and Finance Law Daily Wrap Up, CONSUMER FINANCIAL PROTECTION BUREAU—GAO provides update on CFPB reorganization efforts, (Feb 10, 2026)
Organizations Mentioned:Consumer Financial Protection Bureau | Government Accountability Office | Office of Personnel Management
The GAO noted that some actions remain unresolved due to ongoing litigation.
The Government Accountability Office (GAO) released an audit report detailing the Consumer Financial Protection Bureau’s ongoing reorganization, documenting actions taken since February 2025 to reduce the agency’s size and scope, and the status of court challenges affecting those efforts. CFPB undertook significant downsizing efforts beginning in February 2025, including stop work orders, the closure of supervisory examinations, and the termination of employees, contracts, and enforcement cases.
Congress asked the GAO to review the effect of recent stop-work orders, workforce reductions, contract terminations, and other related actions on CFPB’s ability to fulfill its statutorily mandated functions. The report describes the status of CFPB’s significant reorganization efforts as of August 2025.
GAO analyzed publicly available information on CFPB’s reorganization efforts, including court filings involving CFPB, Federal Register notices, press releases, executive orders, memorandums from the Office of Personnel Management and Office of Management and Budget, and nonpublic CFPB documents regarding detailees to the agency (during the time frame of February-August 2025). According to the report, the CFPB declined to meet with auditors or provide requested information, citing ongoing litigation. The agency did not supply documents or responses to questions despite extensions. Some actions remain unresolved due to ongoing litigation.
Current litigation. The CFPB’s efforts to terminate employees became the subject of multiple preliminary injunctions issued by federal district courts. These injunctions prevented the Bureau from taking various personnel related actions associated with its downsizing initiatives.
CFPB attempted to terminate contracts and close supervisory examinations, but these activities were also restricted by injunctions. As a result, the legal constraints on contract and supervisory actions remained unsettled heading into 2026.
On August 15, 2025, the D.C. Circuit vacated a district court injunction that had prevented certain personnel and contract actions, but delayed effectiveness to allow time for a rehearing request. On December 17, 2025, the court granted rehearing en banc, vacated the August order, and scheduled oral argument for February 24, 2026.
The Fourth Circuit stayed a district court order that had granted an injunction blocking the termination of probationary employees across several federal agencies, including CFPB. The Ninth Circuit, in contrast, denied a motion to stay a district court injunction that barred agencies—including CFPB—from terminating probationary employees. These differing appellate outcomes created a fragmented legal environment for CFPB’s workforce actions, with separate circuits imposing different limits.
On April 8, 2025, the Supreme Court issued a stay of a district court preliminary injunction related to probationary employee terminations.
Reduction in funding. Congress enacted a statutory reduction in CFPB’s funding cap via the One Big Beautiful Bill Act, signed into law on July 4, 2025. The cap was lowered from 12 percent to 6.5 percent of the Federal Reserve System’s 2009 operating expenses (adjusted annually).
Agency comments. GAO provided a draft of this report to CFPB for review and comment. In response, CFPB expressed concerns with the accuracy of the report, stating that the report contains “inaccurate, biased, and incomplete information.” CFPB also stated that the agency was “constrained by ongoing litigation from providing all the information and data necessary to correct the report and that it had cooperated and attempted, where possible, to provide accurate data and context.” And the Bureau characterized the timelines for requesting information for the report as “limited and arbitrary.”
GAO laid out a timeline of the “multiple opportunities” it provided for the CFPB to ensure that the GAO had complete and accurate information. GAO communicated its audit timeline and requests repeatedly, including notices on May 1, May 22, May 28, and June 12, 2025; however, CFPB did not provide substantive responses or corrections to GAO’s draft materials. According to the GAO, CFPB “did not take advantage of any opportunity to provide us with information it considered relevant to our work, only noting that ongoing litigation prevented it from doing so.” Additionally, GAO “stands by the accuracy of the facts presented” in the report, saying that they are based on publicly available information including court dockets and Federal Register notices.
Future report. GAO plans to examine the effects of the Bureau’s actions as the subject of a future report.
RegulatoryActivity: CFPB DoddFrankAct OversightInvestigations