Banking and Finance Law Daily Wrap Up, CONSUMER FINANCIAL PROTECTION BUREAU—Waters says CFPB shutdown furloughs would be ‘legally baseless’, (Oct 1, 2025)

By Steven Melendez

The top House Financial Services Committee Democrat said the agency has operated during previous shutdowns and furloughing its staff would be harmful to consumers.

Representative Maxine Waters (D-Calif.), the ranking Democrat on the House Financial Services Committee, opposed any plans to furlough Consumer Financial Protection Bureau (CFPB) staff as both "legally baseless and harmful." In a letter to Russell Vought, the CFPB's Acting Director, Waters cited reports that Vought "might be considering furloughing employees" at the agency during the gap in appropriations and resultant shutdown that began October 1. She indicated that the CFPB's funding structure, involving funds transferred from the Federal Reserve rather than Congressional appropriations, means that it doesn't need to stop operating during a government shutdown.

"In fact, the CFPB has continued its operations through multiple shutdowns, including the record long shutdown during President Trump’s first term," Waters wrote. "This is precisely because the Bureau’s funding does not depend on the annual appropriations process, and instead receives its funding from the Federal Reserve. A shutdown does not apply to the CFPB."

Waters cited a report that Vought told CFPB staff to "resubmit their resumes by September 25" to help with decisions on who to lay off at the agency. Vought is citing the appropriations gap in suggesting layoffs even though the CFPB has access to new funds from the Federal Reserve as the federal fiscal year begins, regardless of the shutdown, Waters argued. In a statement, Waters categorized the reported move as part of a larger plan by the Trump administration to weaken and ultimately eliminate the CFPB.

"Using a government shutdown as a pretext to furlough staff would not only violate the CFPB’s statutory mandate but would cause direct harm to American consumers," Waters wrote. "With fewer staff available to investigate violations of consumer financial protection laws, pursue enforcement actions, and stop predatory practices, bad actors in the financial sector will continue to operate unchecked."

Such a move would be particularly harmful at a time when Americans are struggling with inflation and unemployment, Waters argued. She called upon Vought to instead work with Congress to oppose budget cuts at the CFPB that she called harmful to consumers.

"Instead of vilifying individuals, who have dedicated themselves to serving the public, with repeated threats of mass layoffs, we urge you to stop these unlawful tactics and support the public servants at the CFPB," Waters wrote. "We also encourage you to work with Congress to reverse the unjustified and ruthless CFPB budget cuts that only leave consumers exposed to financial fraud and predatory rip offs inflicted by unsupervised bad actors."

LegislativeActivity: CFPB DirectorsOfficersEmployers FinancialStability OversightInvestigations