WASHINGTON (Reuters) -The top U.S. watchdog agency for consumer finance will cut its inspections of financial services companies in half while focusing on threats to military personnel and turning away from areas like student loans, medical debt, digital payments and consumer data, according to a memo sent to staff on Wednesday.
The decision indicates the U.S. Consumer Financial Protection Bureau intends to continue supervision and enforcement activities even though President Donald Trump and billionaire Elon Musk, whom Trump charged with overseeing government cost-cutting efforts, earlier this year called for the agency’s elimination.
The changes, however, point to a fundamental reorientation of priorities away from areas that had been core to the CFPB’s work in previous administrations.
CFPB representatives did not immediately respond to a request for comment.
“The bureau will focus its enforcement and supervision resources on pressing threats to consumers, particularly service members and their families and veterans,” Mark Paoletta, the chief legal officer, wrote, according to a copy of the memo seen by Reuters.
The memo, which was first shared on X by a Wall Street Journal reporter, said all prior CFPB documents setting enforcement and supervision priorities had been rescinded.
Created in 2010 following the 2008 financial crisis, the CFPB is the sole federal agency with power to enforce consumer financial laws at nonbank institutions such as mortgage originators and payment services. But the memo said the CFPB would reverse recent trends and focus more on “the largest banks” rather than nonbanks, which it said now got most of the bureau’s attention.
The agency’s work involves direct supervision of such companies as well as enforcement through the courts. However, after Trump fired the CFPB’s director in February, the White House initially froze all enforcement and supervisory activities and dismissed pending cases en masse.
Paoletta said the agency would focus less on matters where state-level agencies also have jurisdiction and would cut the number of supervisory “events” by 50%, sharply reducing the supervision of nonbanks.
The bureau will also “deprioritize” its oversight of financial services for prisoners and detainees, peer-to-peer platforms, digital payments and consumer data, Paoletta said.
Critics have assailed Musk’s involvement at the CFPB through the so-called Department of Government Efficiency as a conflict of interest due to plans by his social media company X to offer payment services. Musk and the White House have rejected such criticism.
(Reporting by Douglas Gillison in Washington; editing by Pete Schroeder and Leslie Adler)
By Douglas Gillison
