The Office Built to Prevent the Next Financial Crisis Is Being Gutted

The Numbers

The Treasury Department's Office of Financial Research began President Trump's second term with 196 employees. It now has about 100 and is preparing layoffs that will bring the total down to approximately 70, according to Government Executive, which obtained internal documents and spoke with current and former employees. When complete, the office will have shed roughly 64% of its workforce since January 2025.

Treasury officially notified staff of the upcoming reductions in force on March 2, telling employees the office is "transitioning to [a] new organization structure" and that "a significant number of positions will be abolished," according to Government Executive. In a separate email obtained by Federal News Network, Treasury's Associate Chief Human Capital Officer Michael Wenzler told OFR staff that impacted employees would be "placed, demoted, and/or separated" no later than May 15.

The administration's own budget documents confirm the scale of the cuts. Treasury's FY 2026 congressional budget justification calls for a reduction of $25,168,000 and 124 full-time equivalent positions at OFR, framing the cuts as part of "the Administration's initiative to improve Government efficiency and effectiveness."

What OFR Does

Congress created the Office of Financial Research as part of the 2010 Dodd-Frank Wall Street Reform Act, the sweeping legislation passed in response to the 2008 Global Financial Crisis. OFR's mandate is to collect data and publish analysis related to potential risks to the financial sector and the broader U.S. economy. It reports to the Financial Stability Oversight Council, a separate entity within Treasury comprising various financial regulators.

The office was designed to fill a specific gap exposed by the 2008 crash: no single agency had been aggregating the data needed to see systemic risk building across the financial system before it was too late.

One detail that makes the cuts unusual: OFR is funded entirely by fees levied on large financial institutions — not by taxpayer dollars. Reducing the office's budget does not contribute to deficit reduction. According to Government Executive, the agency told employees that Treasury's decision to shrink its budget in fiscal 2026 necessitated the layoffs.

The Warning From 50 Former Officials

The dismantling of OFR has not gone unnoticed by the financial establishment. Last June, more than 50 former Federal Reserve chairs, other former government officials, and academics released a letter urging Congress to protect the office, according to Government Executive. The letter was shared by the Senate Banking Committee's minority office.

The signatories wrote: "History shows that financial crises have high socio-economic costs and that the economic recovery from such crises tends to be protracted. Defunding or significantly downsizing the OFR and its financial data and analytics would be a mistake, particularly so given today's elevated macro-financial uncertainties."

Congressional Republicans had previously attempted to eliminate OFR entirely through last year's One Big Beautiful Bill Act, arguing the office was duplicative and that the Financial Stability Oversight Council could conduct its own research. The Senate parliamentarian ultimately ruled that provision could not be included in the reconciliation bill, according to Government Executive.

Inside the Office

Government Executive spoke with current employees who described the atmosphere and the implications. One employee still at OFR said: "I think it's scary and concerning. We are already a small office but we have people who are focused on a number of different areas … that are crucial for the functioning of the U.S. economy."

The data team, which forms the backbone of OFR's analytical work, has already been reduced to just a few people due to the mass departures that occurred last year, according to current and former employees who spoke to Government Executive. Other teams have been cut in half or more.

Lincoln Foran, currently serving as OFR's director, called a town hall meeting with one hour's notice to inform employees of the layoff plans, according to Government Executive. It was the first time he had addressed the workforce since recently joining the office. Foran attempted to empathize by telling staff it was a tough situation he understood because his father had worked at Bear Stearns — the investment bank that collapsed during the 2008 crisis. An employee present told Government Executive: "The line did not go over as he intended."

Employees were given another opportunity to take a "deferred resignation," meaning they would sit on paid leave through September before leaving the agency. Federal News Network confirmed that employees facing RIF notices are eligible for outplacement assistance and priority consideration for other Treasury positions at or below their current level.

The Political Divide

Sen. Elizabeth Warren, the top Democrat on the Senate Banking Committee, told Government Executive: "As risks emerge in the financial system and cracks in credit markets spread, the Trump administration is gutting the office designed to evaluate financial risks in a giveaway to Wall Street. This is just the latest move by President Trump and his financial regulators to undermine financial stability and pave the way for another crash."

The timing carries particular weight. The cuts are proceeding during a period of significant economic turbulence — with the Iran war roiling energy markets, recession indicators flashing, and credit markets showing signs of stress. Multiple current employees emphasized to Government Executive that their work is not redundant to what other agencies do but is instead conducted to support other regulators' work.

One employee told Government Executive: "OFR is supposed to be an early warning system for problems in the financial system, and they don't want that early warning system. They don't want those risks being pointed out."

Another said: "We talk about shining light into financial areas that aren't often exposed, and that's not seen as a plus."

Treasury did not respond to Government Executive's request for comment.

The Broader Pattern

The OFR cuts fit into a larger pattern of reductions across Treasury. The IRS, for example, lost more than a quarter of its total workforce last year through voluntary separations and retirements, according to Federal News Network. Its technology division lost roughly 40% of employees and nearly 80% of its leadership, according to IRS Chief Information Officer Kaschit Pandya, who disclosed the figures at an industry conference in February, as reported by Federal News Network.

The Government Accountability Office reported last week that major staffing reductions at the IRS "could greatly affect its ability to use AI," according to Federal News Network. The IRS's Research, Applied Analytics and Statistics unit, one of the agency's biggest AI users, lost more than 60 employees who worked on AI full-time or part-time.

As one OFR employee put it to Government Executive: "It's going to be a loss to the financial world when we are essentially kneecapped. It's going to be more difficult to get the work done, and I think that's the plan. That's the desired goal."