CFPB's enforcement chief resigns, citing 'no path' forward

Bloomberg News

• Key Insight: The CFPB's enforcement chief called the November nomination of a permanent director a "technical maneuver," with no plans for permanent leadership at the agency.
• What's at Stake: Three enforcement directors have resigned from the CFPB this year, a sign of the massive upheaval created by the Trump administration.
• Expert Quote: "There is no path to an effective future enforcement program at the Bureau." — Michael G. Salemi, the principal deputy enforcement director.

Michael G. Salemi, the principal deputy enforcement director at the Consumer Financial Protection Bureau, is resigning, saying he sees no path forward for enforcement under the Trump administration. Salemi is the third enforcement chief to resign from the agency this year.

On Thursday, Salemi announced his departure at a meeting of the bureau's enforcement division. In an email to staff, he said that the CFPB had reportedly admitted that the November nomination of a permanent director to replace acting CFPB Director Russell Vought "was a technical maneuver, confirming in my mind that any transition to permanent leadership is far off." 

Vought, the director of the Office of Management and Budget, is reaching the limit of his time as acting director of the agency, and the Trump administration has put forward the name of an OMB official as a placeholder allowing Vought to continue to lead the CFPB for another 210 days, and potentially longer.

Last month, Salemi had to tell the enforcement staff that more than 100 people are likely to be furloughed because the CFPB is going to run out of money — the latest effort by Vought to dismantle the agency. The CFPB plans to transfer roughly 30 remaining enforcement cases in active litigation to the Department of Justice.

"When I took on this current role, I expected there would eventually be significant reductions in force and a narrower Enforcement program. I thought I could help ensure that, for whatever version of Enforcement that survived, the Division would be positioned to carry out the Bureau's enforcement functions under a permanent Director," Salemi wrote in the email. "In the last several weeks, it's become clear to me that, if things proceed as planned, there is no path to an effective future enforcement program at the Bureau." 

Vought has claimed the CFPB will run out of money in early 2026 because he refuses to ask for funding. Salemi cited the novel legal theory Vought has put forward as one reason to leave. Vought claims he cannot ask the Federal Reserve System for funding because the central bank has been unprofitable since 2022.  

"Most significantly, the Bureau adopted a new interpretation of 'combined earnings' under the Dodd-Frank Act that purportedly prohibits the Bureau from requesting funds from the Federal Reserve to continue operations," he wrote. "As a result, the Bureau plans to transfer Bureau litigation to the Department of Justice. The Bureau also reportedly confirmed that the November nomination of a permanent director was a technical maneuver, confirming in my mind that any transition to permanent leadership is far off." 

Notably, the CFPB has been funded for the past two years even though the Fed has been unprofitable, and the Fed could return to profitability in the first quarter of next year, according to some estimates. Some legal experts think Vought is trying to shoehorn the funding issue into a second potential Supreme Court battle. Last year, the Supreme Court upheld the constitutionality of the CFPB's funding through the Fed. 

CFPB court battle with union continues with no end in sight

The Consumer Financial Protection Bureau and its union filed legal briefs Friday after a district court judge asked if a preliminary injunction aimed at preventing a mass layoff is still in effect.

The National Treasury Employees Union sued Vought in February to stop him from firing 90% of CFPB employees through a reduction in force. The court battle with the union continues, and has kept Vought from firing staff en masse. A district court judge is expected to weigh in on whether Vought violated a preliminary injunction by refusing to seek funding for the bureau. 

Salemi's resignation comes after Cara Peterson, the de facto acting enforcement director for four months, resigned in June, and Eric Halperin, the former enforcement chief, left in February. Salemi has served under every CFPB director and acting director since starting at the bureau in 2011, when the agency was first formed. He said that he had hoped to spend the rest of his career at the CFPB.