CFPB Faces Cash Crunch As Trump’s New Funding Cap Takes Hold

The Consumer Financial Protection Bureau is running out of money and won’t be able to fully replenish it under a new funding cap imposed by Republicans, jeopardizing the agency’s spending on personnel and cybersecurity.

As of early July, the federal consumer finance watchdog was down to $160 million to cover personnel and other expenses through Sept. 30, multiple people familiar with the agency’s financial status said, requesting anonymity to discuss internal budgetary matters.

It’s spending around $18 million every two weeks on wages and benefits, the agency’s largest expense despite most work being halted, people familiar with the matter said.

That’s a far cry from early February, when acting CFPB Director Russell Vought declined to request another penny for the agency, arguing it had $712 million in a Treasury account that could cover all expenses needed to run a “streamlined” operation.

The CFPB, though, at the time only had around $412 million in unobligated funds to pay for future costs, with the rest already designated, according to a court declaration from its chief financial officer.

To make matters worse, the CFPB couldn’t seek more from the Federal Reserve for the rest of fiscal 2025 thanks to the Republican budget reconciliation measure (Public Law 119-21) President Donald Trump signed on July 4.

“What we’re seeing isn’t just a budget cut,” said Amanda Jackson, the consumer campaigns director at advocacy group Americans for Financial Reform. “It’s a structural defanging.”

Meanwhile, the CFPB is paying nearly $5 million for Vought’s unprecedented security detail, according to an internal email previously obtained by Bloomberg Law.

The CFPB didn’t respond to multiple requests for comment.

Personnel Costs

The GOP budget law slashed the amount of money the CFPB can request by nearly half, limiting it to around $446 million in fiscal 2025 instead of $823 million.

The agency has already exceeded the new cap for the current fiscal year after Biden-era Director Rohit Chopra requested around $500 million combined for the first two quarters. And Vought’s running out of time to prepare a request for more funding in fiscal 2026, people familiar with the matter said.

The CFPB, created after the 2008 financial crisis, is funded through Fed transfers rather than congressional appropriations in a setup the US Supreme Court upheld last year.

The lower cap is now set to force staffing cuts.

Vought has already tried on two occasions to carry out reductions in force that would’ve wiped out most of the CFPB’s approximately 1,700-member workforce as of the start of 2025.

Federal courts stepped in to halt those cuts both times.

But even if the mass firings are ultimately blocked, the CFPB had allocatedaround $525 million for compensation and benefits for fiscal 2025—outstripping the new annual funding transfer cap. Total spending on personnel will likely be closer to $430 million for the current fiscal year given the level of attrition at the CFPB under Vought, according to a person familiar with budgeting matters.

Severance Questions

The new cap may also jeopardize the CFPB’s ability to pay severance to employees who leave, especially if courts allow mass layoffs.

Several hundred staff members at the CFPB have already left since Vought took over, including high-profile attorneys and regulatory officials, and the pace of departures is picking up, the people familiar with the matter said.

Hundreds more may soon be caught up in a reduction in force.

Most federal agencies are required to pay severance to employees subject to a RIF. Other financial regulators, such as the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp., have offered employees buyouts before resorting to RIFs.

The CFPB hasn’t.

The CFPB isn’t bound by the same federal rules and can establish its own severance policy because it’s an independent agency.

In the early days of the Trump administration, top CFPB officials discussed severance as a right for employees. That changed as the budget picture darkened, leaving current workers worried that they won’t receive any payments, people familiar with the matter said.

The CFPB estimates that around 800 current employees would be eligible for an average $60,000 severance payment—totaling around $48 million—if the agency chooses to provide them, people with knowledge of the situation said.

Employees on average also have 200 unused annual leave hours that will have to be paid out, they said.

Cybersecurity Changes

The CFPB initially budgeted nearly $231 million to “other contractual services” in fiscal 2025, the agency’s second-largest financial expenditure after employee compensation.

Those expenses included contracts for cybersecurity and antivirus software.

But now the CFPB isn’t renewing at least some of its cybersecurity contracts, according to agency and contractor personnel who requested anonymity to discuss the budget matters.

In some instances, the CFPB is putting contracts out for rebidding in a move to reduce costs. In others, the agency is simply walking away, people familiar with the issue said.

The CFPB already moved to cancel more than $100 million in contracts under cost-cutting initiatives led in February by Vought and the Department of Government Efficiency, potentially putting cybersecurity at risk. Those moves were also placed on hold by a federal judge.

Security Detail

The CFPB’s budget woes come as it agreed to pay nearly $5 million to cover the costs of Vought’s security detail through December.

No previous CFPB directors had security details, people familiar with the matter said. Vought is also the director of the Office of Management and Budget, a role that doesn’t typically come with a security detail.

Cat Farman, the president of the CFPB’s chapter of the National Treasury Employees Union, said in a statement that the spending on Vought’s security highlights the agency’s new priorities.

“Vought should spend less time scheming how to stiff working people and bankrupt the CFPB with million-dollar security details and more time protecting everyday Americans from corporate fraudsters and scammers as Congress intended,” she said.

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