From Bloomberg Law
The Trump administration appears to be preparing to transfer employees from the Federal Deposit Insurance Corp. and the Consumer Financial Protection Bureau to the Office of the Comptroller of the Currency as part of a broad reshaping of bank supervision.
The OCC has created email distribution lists for FDICTransferees@occ.treas.gov, CFPBTransferees@occ.treas.gov, and CFPBTeam@occ.treas.gov, according to Outlook templates obtained by Bloomberg Law from multiple sources at different agencies who were granted anonymity to prevent retaliation.
The potential reshuffling comes as President Donald Trump and his team purge the FDIC and CFPB workforces—part of a broader campaign to slash the federal bureaucracy.
The Trump administration is mulling whether to consolidate the bulk of bank supervision inside the OCC, The Wall Street Journal reported.
The national bank regulator is nominally housed inside the Treasury Department, although the National Bank Act—the 1863 law that created the OCC—says the comptroller should be independent of the Treasury secretary.
Trump hasn’t announced any plans to relocate the FDIC and CFPB employees or to push for a broader overhaul. But even creating a list for transferees without congressional approval would be an unconventional move, said Graham Steele, the former assistant Treasury secretary for financial institutions in the Biden administration.
“That would strike me as a highly unusual thing,” Steele, an academic fellow at Stanford Law School and a fellow at the Roosevelt Institute, said.
The OCC and representatives for the Office of Management and Budget, which is handling media requests for the CFPB, didn’t respond to requests for comment. The FDIC declined to comment.
Workforce Reductions
The FDIC on Feb. 17 laid off around 170 probationary employees and last week lost around 500 workers to the Trump administration’s deferred resignation “buyouts.” Those losses represent around 10% of the agency’s staff.
The FDIC will be smaller when the job cuts are finished, acting Chairman Travis Hill told a Feb. 14 agency town hall, but he brushed off the consolidation talks as premature, according to an agency spokesperson.
Acting CFPB Director Russell Vought has already fired 70 probationary employees, including enforcement attorneys working active cases, and 70 to 100 “term” employees, including technologists investigating Big Tech’s push into consumer finance, fellows, and participants in the director’s financial analyst program.
Vought is also planning to fire up to 95% of the CFPB’s staff, the National Treasury Employees Union—which represents CFPB workers—said in a Feb. 13 court filing. Those plans are now on hold as part of the union’s lawsuit to block the terminations.
‘Pretext to Combine’
The Trump transition team has long been working on bringing bank regulators under a single roof, as first reported in December by The Wall Street Journal.
Hollowing out their workforces could be used as “pretext to combine them” without a change in law, said Todd Baker, a senior fellow at Columbia University’s Richard Paul Richman Center for Business, Law, and Public Policy.
“The justification, said with a straight face, would be that there aren’t enough people left in the individual agencies to do their jobs after all the firings/resignations and that ‘management consolidation’ without agency merger will allow the acting leader to ‘efficiently’ allocate people from multiple agencies where needed without new hires,” Baker said in an email.
Trump this month nominated Jonathan McKernan to lead the CFPB and Jonathan Gould as the OCC’s chief, but notably he didn’t name his pick to lead the FDIC full-time.
The administration will also likely cite duplication of responsibility and “the miracle of AI” in justifying the consolidation, Baker added.
‘Byzantine’ Accident
The idea of consolidating federal banking regulators is hardly new.
Most community banks are supervised by the FDIC. The OCC oversees national banks, while the Federal Reserve oversees some community banks and all bank holding companies. All of those determinations are required under federal law.
In addition, the CFPB oversees consumer compliance at banks with $10 billion or more in assets plus other nonbank companies.
In short, it’s an area ripe for reform, said Steven Kelly, the associate director of research at the Yale School of Management’s Program on Financial Stability.
He noted that the CFPB itself is housed in the former headquarters of the Office of Thrift Supervision, which was folded into the OCC in the 2010 Dodd-Frank Act that also created the CFPB.
An earlier, now-shuttered financial regulator was in that space before the OTS, Kelly said. “The banking regulatory system is byzantine and a historical accident.”
So far, banks seem to be sanguine about the potential regulatory changes.
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