In a significant development, two key leaders at the Consumer Financial Protection Bureau were relieved of their duties on Tuesday, marking the initial step in the Trump administration’s plan to reduce the size of the agency. Eric Halperin, the enforcement director, and Lorelei Salas, the supervision director, were placed on administrative leave by Mark Paoletta, who serves as the top legal counsel at both the CFPB and the White House Office of Management and Budget.
Halperin, who reportedly made statements that appeared to defy directives from Trump’s officials to halt all activities, resigned shortly after being informed of his immediate suspension. Salas also reportedly resigned, although this information has not been officially confirmed.
The entire CFPB staff was instructed by acting director Russ Vought on Monday to refrain from reporting to the office and to seek written approval before carrying out any work responsibilities. Paoletta emphasized in an email to the staff that any actions related to enforcement were strictly prohibited, with insubordination potentially resulting in disciplinary measures.
Both Halperin and Salas have previous affiliations with Democratic figure George Soros’ Open Society Foundations. Trump’s administration commenced efforts to downsize the 1,700-person agency, with Vought issuing the directive for employees to stay away from the office on Monday.
The CFPB has long been a target of criticism from Republicans who assert that it operates without accountability and is overly aggressive in its financial oversight. Established in 2010 under President Obama and Senator Elizabeth Warren’s advocacy, the bureau was tasked with addressing risky lending practices that contributed to the financial crisis.
While the bureau has touted its achievements, highlighting the restoration of billions to American consumers, detractors argue that it has overstepped its authority by engaging in initiatives such as Operation Choke Point and regulating sectors beyond its original scope. Vought currently leads the CFPB as its acting director.
The Senate-confirmed Director of the Office of Management and Budget (OMB) has assembled his team at the bureau, which is conveniently situated just across from OMB near the White House. The dismissals commenced at the Consumer Financial Protection Bureau (CFPB) following Elon Musk’s Department of Government Efficiency initiative last week. This initiative initiated the termination process for nearly all 10,000 employees of the United States Agency for International Development (USAID), arguing that the agency was deemed unnecessary.
