Over 2,300 positions at the Securities and Exchange Commission (SEC), the Office of the Comptroller of the Currency (OCC), and the Federal Deposit Insurance Corporation (FDIC) will be eliminated as part of a significant staff reduction by the Trump administration at important U.S. financial regulatory organizations. Bank examiners, criminal investigators, and economists—all essential to market and banking supervision—are among the people being laid off.
Trump administration cuts jobs at top finance regulators
For these agencies, the workforce contraction is the most severe in decades. The SEC has restructured its regional offices, while the OCC has already reorganized its supervision teams, eliminating size-based bank groups. Although the FDIC has not formally implemented structural changes, it is reportedly reevaluating its approach to financial institution supervision.
In line with Trump’s plan to reduce government control, the administration argues that these staff reductions are a step toward deregulation and economic stimulation. The number of employees at these agencies has already decreased by about 1,000 during Trump’s first term, and that figure has doubled in this new round of cuts.
Critics loud against job cuts
Critics claim there could be serious repercussions. They contend that fewer local regulators allow for unbridled risk-taking in the financial industry, particularly in times of market volatility. “Overworked and inexperienced personnel may miss early signs of systemic threats,” said former OCC official Michele Alt.
Opponents point out that these agencies are self-funded through fees and fines rather than taxpayer dollars, despite the justification of federal cost savings. Since 2015, the FDIC has made $74 billion more than it has spent, with the majority going toward funding its insurance fund. In a similar vein, the OCC has recently experienced surpluses.
Former Federal Reserve lawyer and current University of Michigan professor Jeremy Kress thinks the cuts may be expensive. “Short-term savings are likely to be outweighed by the long-term damage caused by reduced oversight,” Kress said.
The Consumer Financial Protection Bureau (CFPB) has also been criticized. Republican-led attempts have been made to dismantle the agency since it was established following the 2008 financial crisis. About 200 CFPB employees have already been let go by Trump’s team, and more layoffs are pending legal action. The administration wants to reduce the agency’s oversight, particularly of fintech platforms and non-bank financial institutions.
The changing regulatory environment has alarmed some bank executives. A few have pointed out a discernible shift in the continuity and experience of agency employees. Industry watchers emphasize that smart regulation calls for knowledge, not just fewer regulations. Karen Shaw Petrou of Federal Financial Analytics gave her take, saying, “The issue isn’t the number of regulators—it’s how they’re managed and empowered.”
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