Email trove reveals CFPB turmoil after Vought’s work stoppage

A new trove of emails unearthed in federal court reveals chaos unleashed by the Trump administration’s abrupt shutdown of the Consumer Financial Protection Bureau, the Obama-era agency meant to shield Americans from unfair banking practices.

Hundreds of pages of communications show career officials grasping for clarity in the weeks after the CFPB’s acting director, Russ Vought, ordered Feb. 10 a total stoppage of all “work tasks.” That order in many ways conflicted with officials’ legally required responsibilities.

The employees laid out a long list of consequences:

• Enforcement actions had been halted, even though some were subject to court-ordered deadlines.

• Mass termination of contracts was jeopardizing enormous caches of CFPB data held by third parties — including some public records required to be stored.

• Contracts supporting other legally required work had been canceled and would be difficult to restart.

Then, the emails reveal, as a lawsuit against the shutdown progressed, the agency’s Trump-appointed leaders scrambled to restart those required programs. And the leaders suggested that Vought’s Feb. 10 email — despite its unambiguous language — was never intended to halt all of the agency’s work.
“It has come to my attention … that some employees have not been performing statutorily required work,” Vought’s top legal aide, Mark Paoletta, wrote March 2. “Let me be clear: Employees should be performing work that is required by law and do not need to seek prior approval to do so.”

The communications were filed as part of the rapidly advancing lawsuit brought by Treasury workers against the dismantling of the agency. U.S. District Judge Amy Berman Jackson has ordered a Monday hearing with witness testimony to fully resolve disputes about the internal chaos that has wracked the agency for weeks. The lawsuit was filed Feb. 9 but accelerated Feb. 13 after Vought’s blanket stop-work order.

The consumer bureau — long a bete noire for Republicans and financial institutions — is at the center of a campaign by the Trump administration and Elon Musk’s Department of Government Efficiency to dramatically slash the federal bureaucracy. The bureau’s headquarters have been shuttered since Vought’s Feb. 10 stop-work order.

Still, President Donald Trump nominated veteran regulator Jonathan McKernan on Feb. 11 to lead the agency, signaling he planned to keep it going. McKernan pledged to continue the agency’s work as laid out in the law during his Senate Banking Committee confirmation hearing last week.

The emails show that top CFPB staffers viewed the takedown of the agency’s homepage as an order from Vought himself, and despite the staff’s desperate calls to restore it, senior leaders said they had no authorization to do so.

The exchanges also show the repercussions of attempting to restart paused work after the mass cancelation of contracts, many of which appear to be more challenging to revive than to abruptly cancel.

The most recent messages also show an intense exchange between Paoletta and a senior CFPB official. Paoletta accused the official of undermining his authority and questioned the official about a potential leak to the media of his internal instructions.

The emails reveal that by Feb. 27, Paoletta had been inundated with requests to restart paused work that employees said was required by statute — ensuring “nondiscriminatory access to credit,” processing consumer complaints, processing public records requests and helping advise military lawyers on basic tasks like logging into systems to preserve key data. Those requests were largely approved.

Paoletta’s March 2 email, on the eve of a hearing with Jackson in the lawsuit, appeared aimed at putting to rest any confusion over whether staff could proactively restart their legally required work without explicit permission. He noted that prior to the blanket order Feb. 10, Vought had issued a more targeted email Feb. 8 that called for a halt of work unless “required by law.”

But Paoletta’s email triggered even more confusion.

“Based on every email starting 2/10 the unambiguous guidance was to stop all work tasks, no stipulation of [legal] requirements was made,” Irina Muchnik, a tech official at CFPB, wrote in a March 3 email. Muchnik said the agency’s “consumer complaint database” had not been updated for weeks and was displaying error messages, as a result of the stoppage.

In another exchange, on the morning of March 3, the bureau’s chief financial officer, Jafnar Gueye, described “a lot of requests” to restart canceled contracts but said the agency would be taking a “very narrow approach.” Only contracts absolutely essential to meeting legal requirements of the agency would be considered for reactivation, Gueye emphasized.

Others described apparent tension between the directions issued by Vought and Paoletta and requested clarity.

“I’ve received a number of messages from staff who are understandably confused by the information in this email,” wrote Cassandra Huggins, the principal deputy assistant director of CFPB’s supervision policy & operations, of the March 2 missive.

Huggins noted that even Vought’s Feb. 8 email appeared to demand the stoppage of some legally required tasks. Adam Martinez, the CFPB’s chief operating officer, responded that Huggins was correct — Vought’s call for work stoppages in the Feb. 8 email was still in effect. As a result of that confusion, Huggins told colleagues to keep all “supervisory” work on hold, even if it was required by law.

That directive from Huggins prompted an intense reaction from Paoletta.

“I am concerned that you sent out an internal agency communication on such an unfounded basis that is false and directly contradicts my March 2nd message without first getting confirmation directly from me,” Paoletta wrote. “Your actions severely undermine the Agency leadership’s ability to supervise the agency staff and to ensure that statutorily required duties are being performed.”

Paoletta also said he learned of Huggins’ directive in a Reuters report. “Did you provide your internal agency communication to the media or do you know who provided it?” he wrote. “Please provide your answer to me by 6 pm today.”

Huggins responded that she did not provide the email to the media or know who did.

“I did not intend to undermine the new administration’s ability to supervise agency staff,” she wrote. “My only intention was to ensure that our staff did not act against the direction in the February 8 email from Acting Director Vought.”