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Consumer Law

Consumer Financial Protection Bureau employees ordered to ‘stand down’

By Debra Cassens Weiss

February 13, 2025, 9:46 am CST

Employees at an agency established to protect consumers against wrongdoing by financial institutions have been ordered to “stand down” and stop activities, leading to the resignations of top officials.

The employees at the Consumer Financial Protection Bureau got the directives in a series of emails beginning last weekend from Russell Vought, the acting CFPB director, and from Mark Paoletta, the chief legal officer at the Office of Management and Budget, report Bloomberg Law and Law360 (here and here).

Employees were ordered to stay away from the agency’s Washington, D.C., headquarters for a week. There are new enforcement priorities, staff members were told, and attempts to move forward on cases would be considered “insubordination.”

Vought also revealed that he would not seek funding from the Federal Reserve for the next quarter.

“The moves appear to be a prelude to essentially shuttering the CFPB, following a playbook that was deployed to stop operations at the U.S. Agency for International Development,” Bloomberg Law reports.

Lorelei Salas, the CFPB’s supervision director, and Eric Halperin, the CFPB’s enforcement director, resigned Tuesday, citing an inability to do their jobs, Law60 reports in another story.

The orders “left in limbo” significant cases that began in the Biden administration, Reuters reports. They include lawsuits accusing Capital One of misleading consumers about savings accounts, accusing Walmart of forcing delivery drivers to use accounts with junk fees to get paid, and accusing banks of failing to protect consumers from fraud on the Zelle payment network.

The union that represents CFPB employees has filed two suits, Axios reports. One challenges the stop-work directive, while the other seeks to block access to employee information by the Department of Government Efficiency.

President Donald Trump has named Jonathan McKernan, a board member of the Federal Deposit Insurance Corp., to serve as the CFPB’s new director, the New York Times reports. Bartlett Naylor, a financial policy advocate for Public Citizen, a nonprofit consumer rights advocacy group, said in a statement McKernan has “a history of serving senators bent on hobbling the CFPB.”

Tesla CEO Elon Musk, who is leading the Department of Government Efficiency, celebrated on his social media platform X, formerly known as Twitter.

“CFPB RIP,” he wrote after Vought’s appointment as interim chief, adding an emoji of a tombstone.

The Washington Post and the New York Times point out that Musk is building a new digital wallet called X Money that will allow X users to send money to others. Such payment platforms “have come under intense scrutiny by the Consumer Financial Protection Bureau,” the New York Times reports.

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Criminal Justice

Disbarred lawyer married to ‘Real Housewives’ star found competent to stand trial for alleged $15M embezzlement

By Debra Cassens Weiss

January 4, 2024, 2:24 pm CST

Disbarred plaintiffs lawyer Tom Girardi has been found competent to stand trial in Los Angeles for allegedly stealing $15 million from clients.

U.S. District Judge Josephine Staton of the Central District of California noted the competency finding in a docket entry, report Law.com, Law360 and Reuters. His lawyers have said he suffers from dementia.

Girardi, 84, is the estranged husband of Erika Girardi, who appeared on The Real Housewives of Beverly Hills reality TV show. He was also an adviser to the movie Erin Brockovich and part of the successful legal team portrayed in the film that sued over contaminated groundwater. He currently lives in an assisted living facility.

Girardi is accused of stealing more than $15 million in Los Angeles. In Chicago, he is accused of misappropriating more than $3 million in settlement funds for five relatives of victims killed in the October 2018 crash of Indonesia’s Lion Air Flight 610.

Staton’s competency order is under seal. She has asked the parties to identify which parts of her order should remain sealed.

Girardi and his former law firm, Girardi Keese, have been forced into bankruptcy, according to Law360.

“Since Girardi Keese went bankrupt,” the article reports, “the trustee has filed over 100 complaints against casinos, former Girardi Keese employees and other law firms and companies, seeking a total of more than $140 million.”

See also:

“Ex-lawyer Tom Girardi lashes out at prosecutor in competency hearing; brain shrinkage reported”

“State bar finds ‘shocking past culture of unethical and unacceptable behavior’ in its handling of Girardi complaints”

“More than 1,700 California lawyers suspended for failure to comply with new trust account rules”