General Discussion

The first of the two offending agencies is the Treasury Department’s Office of Financial Research, or OFR. This is a small office—it’s never employed many more than 200 people—dedicated to furnishing policymakers with the kind of detailed information they lacked during the late aughts about mostly unregulated “shadow banks,” such as mortgage companies, private equity, private credit, hedge funds, and the repurchase agreement market, or “repo.” This last provides overnight short-term loans to manage corporate cashflow. The Washington Monthly has called OFR “The Most Important Agency You’ve Never Heard Of.” Here’s a detailed summary of OFR’s accomplishments.

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The financial world doesn’t appreciate seeing the federal government advertise its vulnerabilities, even sotto voce, and Republican Senator Ted Cruz of Texas, who between 2019 and 2024 collected nearly $2 million in campaign contributions from the securities and investment sector, introduced during that same time period three successive bills to abolish OFR, which he called “useless and unaccountable.” Last year’s “one big, beautiful” reconciliation bill initially zeroed out OFR’s budget, but the Senate parliamentarian ruled against that. So Vought took matters into his own hands. Having already halved OFR’s staff from 196 employees to 100, Treasury officials informed staff last month that 64 percent of the remainder will be laid off, according to reports this week by Government Executive and the Federal News Network. This was proposed in President Donald Trump’s 2026 budget, but Vought must have figured: Why wait for Congress?

“As risks emerge in the financial system and cracks in the credit markets spread,” Senator Elizabeth Warren told Government Executive, “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.”