By Douglas Gillison
(Reuters) – Facing a legal challenge over its abrupt decision to halt work last month, the U.S. Consumer Financial Protection Bureau has since Thursday allowed several offices to resume functions that officials say are required by law, according to newly released emails.
The authorizations to restart work came several days after the agency had told a court it was committed to meeting its obligations under the law and did not intend to shut itself down, as an employee union and consumer advocates have alleged.
CFPB representatives did not immediately respond to a request for comment on Wednesday.
The National Treasury Employees Union, which represents federal workers, and others are seeking a court order blocking the Trump administration from essentially liquidating the consumer watchdog agency via work stoppages, contract cancellations and mass layoffs, arguing that officials cannot simply switch off government functions that Congress has mandated by law.
The emails, made public in court late Tuesday under a federal judge’s order, also show a staff whipsawed by what they saw as ambiguous instructions from agency leadership.
Most notably, the emails showed confusion over the status of the agency’s division of supervision – which the Trump administration specifically directed to cease operations last month.
After a senior supervision official said the agency was not allowing policing of various financial institutions to continue, a top agency lawyer, Mark Paoletta, insisted legally mandated work could go forward, while asking for a description of all of its pending work.
After taking control in early February, acting CFPB Director Russell Vought issued instructions halting work unless “required by law” and instructed agency staff not to perform “any work tasks” unless they had obtained advance authorization.
The agency then canceled more than 170 service contracts, including all of those supporting its divisions of enforcement and supervision, among other offices.
And a government-associated account on the social media platform X also appeared, advertising a CFPB email address and inviting the public to report on any CFPB enforcement or supervisory staff engaging in work.
However on Sunday, Paoletta, the agency’s chief legal officer, sent an agency-wide missive saying he had discovered that “some employees have not been performing statutorily required work” and inviting staff to seek authorization if needed.
Emails show Paoletta between Sunday and Monday fielded queries from officials in the CFPB offices of Financial Education, Research, Monitoring and Regulation, Consumer Response and Education, and External Affairs, among others, granting them permission to resume work.
“Consistent with my email, you should be performing these statutorily required duties,” Paoletta told an official in the office of financial education on Monday.
But the matter of policing banks and other financial institutions for compliance with consumer protection laws proved more confusing.
The emails show Cassandra Huggins, a top official in supervision, more than once sought clarification as to whether supervisory staff should adhere to an order to halt supervision or one to perform legally mandated duties.
The CFPB supervises nonbanks and lenders with more than $10 billion in assets to ensure their compliance with federal consumer financial law.
Huggins told her staff on Monday that agency leadership had informed her that Paoletta’s Sunday message did not pertain to supervision even though this was required by law, according to an email seen by Reuters.
That message drew a rebuke from Paoletta on Tuesday who said that, like acting Director Vought, he also works at the White House Office of Management and Budget and so is “dual hatted” and had not been able to respond.
Paoletta also said Huggins’ email was “false,” adding that her office was authorized “to work on matters specifically required by statute.” He asked her team to report to him on its work by March 10.
(Reporting by Douglas Gillison; Editing by Lincoln Feast.)
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