CFPB workers told to ‘stand down,’ stop all work

Russell Vought, the new acting director of the Consumer Financial Protection Bureau, ordered the bureau’s staff again on Monday to stop working and ‘stand down.’ 

“Employees should not come into the office. Please do not perform any work tasks,” Vought said in the email to CFPB staff. “Employees should stand down from performing any work task.”

Separately, the CFPB’s enforcement staff also received an email from Mark Paolotta, a partner at the law firm Schaerr Jaffe LLP who served in the first Trump administration as general counsel of the Office of Management and Budget. Paolotta identified himself in the email to enforcement staff, obtained by American Banker, as the CFPB’s chief legal officer.

“The acting director is implementing new enforcement priorities,” the email states. “Implementation of past priorities is to cease immediately. I am directing you to stand down and not make any further communications, including phone calls and emails to parties that are subject to any pending enforcement matter or prospective enforcement matter without getting my approval in writing.” 

Paolotta’s email came from the CFPB director’s front office. Traditionally, during a changeover in administrations an acting or new CFPB director would hire people to assist as senior advisors. The CFPB’s former general counsel, Seth Frotman, resigned last week and a new general counsel has not been named. In theory, there should be an acting general counsel but the bureau is not issuing any public announcements and the CFPB’s media are not responding to requests for comment. 

CFPB employees are raising questions about why they have been told not to work but have not been placed on administrative leave. 

Vought closed the bureau’s headquarters this week and ordered the agency’s staff on Saturday to stop all activities. He also vowed to cut off funding for the agency, which was first conceived by Sen. Elizabeth Warren, D-Mass., in the wake of the financial crisis as a consumer protection watchdog.  

Vought was named in a surprise move on Friday night to be the new acting CFPB director, taking over from Treasury Secretary Scott Bessent, who held the job for five days.

The National Treasury Employees Union filed a lawsuit on Sunday against Vought in the U.S. District Court for the District of Columbia for trying to shut the agency, saying that only Congress has the authority to do so. The lawsuit seeks to invalidate Vought’s directives as unlawful and to enjoin him from any further attempts to stop supervision and enforcement work. The suit also is asking for Vought to be ordered to pay attorneys’ fees.

“CFPB employees have been placed in questionable status as they have been directed not to work but they have also not been formally placed on any authorized type of leave,” the lawsuit states. “It is substantially likely that these initial directives are a precursor to a purge of CFPB’s workforce, which is now prohibited from fulfilling the agency’s statutory mission.”

“The efforts of Defendant Russell Vought, the CFPB’s Acting Director, to bring the CFPB’s statutorily prescribed work to a halt violates separation of powers principles,” the suit states.

Consumer groups and the National Treasury Employees Union are holding a rally at the CFPB’s headquarters Monday afternoon, with House Financial Services Committee ranking member Maxine Waters, D-Calif., and Senate Banking Committee ranking member Warren expected in attendance.