The Consumer Financial Protection Bureau (CFPB) is enabling some offices to resume functioning as the Trump administration faces legal challenges with suspension work orders and other efforts to overhaul consumer watches.
Mark Paoletta, the CFPB's chief justice officer, sent an email to employees on Sunday to make it clear that they should still do the work they need legally. Several offices at the agency have since been allowed to resume their work, according to a pack of emails filed in court on Tuesday.
“These measures were intended to enable new leadership to establish operational control over the institution, but to ensure that it continues to fulfill its legal duties,” Paletta wrote. “Many of you understood this, continued to carry out the functions required by the law, and sought approval from me to do the job.
“However, it has brought my attention that some employees are not doing the work they legally need,” he continued. “Let's be clear: Employees should do the work required by law and do not need to seek prior approval to do so.”
After CFPB Director Russell Vought was appointed in early February, he initially instructed employees to stop “all supervision and exam activities” and “stakeholder involvement.”
However, he quickly expanded the order a few days later, instructing the agency staff to “stop from performing work tasks” unless approved by Paoletta. Also, employees were told not to enter CFPB headquarters, and the building's lease was later cancelled.
CFPB staff tried to comply with the suspension of work, causing confusion as to whether they could send emails, attend meetings with other agencies, or see certain documents in the legal department.
It also appeared unclear whether employees could carry out legally necessary activities.
In an email last week, the Associate Director of the Fair Lending Office asked if they were allowed to perform statutory functions, such as supporting fair lending exams and enforcement activities and completing Congressional reports.
The team responding to records requests under the CFPB Freedom of Information Act sought permission to continue the work, noting that it is similarly mandatory by law and that stopping work poses a “risk of litigation.” Both requests have been approved.
CFPB Chief Operating Officer Adam Martinez last week sent an email to staff in the research, market and regulatory departments, saying “to ensure that the work required by law and/or the work required by law is permitted.”
He sent a similar mission to the team handling managers at the CFPB. However, he also confirmed that Vought's order to cease all supervisory activities is still in force.
Following Paoletta's Sunday email, the supervisor team asked for clarification from Martinez. Martinez replied that the latest directive “does not change certain work halts.”
As a result, Cassandra Huggins, the key assistant assistant in supervision policies and operations, sent an email to supervisory staff on Monday.
She said Paoletta's message “is not intended to approve a revival of supervisory/examination activities despite the Bureau being required by law to carry out these activities.”
In a lengthy response to Huggins and the supervising staff, Paoletta denounced the email, highlighting that all CFPB staff are allowed to do the work they legally need.
“I'm worried that you sent internal agency communications on such a baseless basis that you haven't mistaken.
“Your actions seriously undermine your ability to oversee agency leadership staff and ensure that statutory requirements of obligations are carried out,” Paletta added.
“She had no intention of undermining the new administration's ability to oversee agency staff,” Huggins said.
“[M]Y's sole intention was to ensure staff did not act against instructions in a February 8 email from the superintendent, in order to halt all supervision and exam activities,” she said.
Other actions taken by the new CFPB leadership have also caused confusion. After the agency's social media accounts were deleted in early February, staff warned that they could be violating record-keeping requirements, the email said.
This issue was exacerbated by pushing to terminate more than 100 contracts. One of them kept a backup record for CFPB social media.
The email was filed as part of a lawsuit filed by the National Treasury Employees Union, which represents CFPB staff and several external groups. They accused the Trump administration of trying to dismantle the agency.
Administrative lawyers have denied allegations that they intend to eliminate the CFPB, highlighting President Trump's nomination of Jonathan McKernan as CFPB director. The Senate Banking Committee voted to proceed with McCernan's appointment on Thursday.
However, CFPB employees have pushed back the administration's claims. In a series of court declarations last week, staff said officials were told by the authorities that they were planning to remove all but five employees, except five, and transfer legally necessary functions to other agencies.
