FDIC likely subject to EO on federal workforce reduction

Bloomberg News

The Federal Deposit Insurance Corp. will likely need to identify staff positions and any programs within the agency not explicitly required by law as part of an executive order signed Tuesday night by President Trump aimed at making deep cuts to the federal workforce. 

Todd Baker, a senior fellow at the Richman Center for Business, Law & Public Policy at Columbia University and managing principal of Broadmoor Consulting LLC, said the order is likely to drive layoffs.

"It is clearly intended to require most agencies (including the FDIC) to assess whether any specific employee is engaged in activities 'not mandated by statute or other law' and 'not typically designated as essential' by OMB," Baker said.

Pursuant to the order, agency heads are directed to work with The Department of Government Efficiency — led by Elon Musk — to downsize the federal workforce and restrict hiring to essential roles. Principals at applicable agencies will develop plans for large-scale workforce reductions and identify agency components — or entire agencies — that could be eliminated or merged if not legally required. An FDIC spokesperson declined to comment on the matter.

The order applies to most agencies, except those tied to national security, public safety, law enforcement, and immigration enforcement. The EO prioritizes reducing staff in offices not explicitly mandated by law — particularly, but not limited to, diversity, equity, and inclusion initiatives — as well as identifying roles not deemed essential during funding lapses for cuts. 

The order requires the Office of Personnel Management within 30 days to propose new disqualifying factors for federal employment, such as failing to meet legal obligations — including timely tax filing — violating federal employment requirements, refusing nondisclosure commitments, or mishandling government resources.  

Agency heads must also report to the Office of Management and Budget on statutory requirements for their agencies and affiliated divisions, evaluating whether any should be eliminated or consolidated — pointing toward potential government restructuring.

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Alexandra Barrage, a partner with Troutman Pepper Locke, says the EO is notable in that it includes independent agencies, including the bank regulators like the FDIC.

"The [executive order's] 'agency' definition includes a government corporation," she said. "FDIC is not excepted — so yes, that's how I read it. It doesn't just include executive agencies; it's broader than that."

Baker says the move seems like a precursor to terminating employees deemed not statutorily essential. While the administration has already targeted employees who work in diversity initiatives, Baker says this could affect large swaths of the federal workforce. 

"The plan after that is done, presumably, is to fire those employees," Baker said. "The clearest target is DEI-focused employees. The meaning of 'mandated by statute or other law' in the context of a long-established agency is highly uncertain, and could pull in large groups of employees essential to the operation of a successful regulator but not specifically called out by statute."

Barrage says when viewed in tandem with recent reports of DOGE staff eyeing consolidating the FDIC into the Office of the Comptroller of the Currency, the Trump administration's government streamlining effort may be coming to the bank regulators — a corner of the federal bureaucracy that is seldom the subject of big, structural changes. The question is whether they can accomplish the set goals under the law. 

"I read these [EOs] at the same time I'm reading the Wall Street Journal article from yesterday about the restructuring," she said. "So I feel like now the focus is on the banking agencies, but I can't tell whether this is something they can actually accomplish or not."

The new details come in the wake of a massive scaling back of government operations in the opening weeks of the second Trump administration, with the newly-formed DOGE — led by billionaire entrepreneur and close Trump ally Elon Musk — leading the charge. DOGE was created by a Trump executive order and charged with combing through the federal government to identify and eliminate wasteful spending and "modernizing Federal technology and software to maximize governmental efficiency and productivity."

Another FDIC employee — who asked to remain anonymous — said there is a town hall-style meeting set for Friday at the agency, where employees can ask Acting Chairman Travis Hill questions about the future of work at the agency. 

An FDIC spokesperson was unable to verify the meeting and its details by press time.

The Trump administration has already drastically reduced international funding through the United States Agency for International Development, or USAID, imposing a sweeping funding freeze on most of the agency's global programs, effectively shutting them down. A federal judge issued an order freezing elements of the administration's actions at USAID pending oral argument in a lawsuit filed on behalf of agency employees. 

DOGE employees have also gained access to Treasury systems that process government payments, reportedly making changes to the source code upon which the system operates. Russell Vought, who was confirmed by the Senate to run the Office of Management and Budget last week, was also tapped as acting director of the Consumer Financial Protection Bureau, telling employees to stop all work. Treasury Secretary Scott Bessent, who had previously held the position of interim CFPB director, had already instructed CFPB employees to cease all rulemaking activities and enforcement actions.