Major staff and budget reductions underway
The Treasury Department is proceeding with plans to significantly scale back the Office of Financial Research (OFR), a unit created after the 2008 financial crisis to monitor systemic risk across the financial system.
According to internal restructuring documents, the department has begun implementing changes that could eliminate up to 63% of the office’s workforce. A March 10 memo notified employees of a reorganization that will cut a “significant number of positions” beginning May 15.
The proposed fiscal plan includes a 23% reduction in the OFR’s operating budget, equal to roughly $25 million compared with fiscal year 2025. The reductions are tied to staff downsizing and program cuts.
Headcount expected to shrink sharply
The OFR reported 196 full-time employees in 2025. Treasury’s budget blueprint indicated plans to reduce staffing by 124 positions. A draft organizational chart shows approximately 70 roles remaining after the restructuring.
Before implementing layoffs, Treasury offered voluntary buyouts and early retirement packages. The office is funded through assessments on large financial institutions rather than direct congressional appropriations.
Role in financial stability oversight
Established under the Dodd-Frank Act, the OFR gathers and analyzes data used by regulators to identify emerging financial risks. Its research supports the Financial Stability Oversight Council (FSOC), an interagency body chaired by the Treasury secretary.
The office also collects underlying data used to calculate the Secured Overnight Financing Rate (SOFR), a widely used benchmark interest rate for financial contracts. Previous legislative proposals from Senate Republicans sought to eliminate the OFR while transferring authority to continue SOFR data collection to Treasury.
A Treasury spokesperson said the department “maintains that the Office of Financial Research will be appropriately staffed to perform its duties to support the Financial Stability Oversight Council and its member agencies.”
Political divide over mission and scope
Republican lawmakers have frequently criticized the OFR, arguing it possesses overly broad data-gathering authority and produces research that overlaps with other regulatory bodies. Senate Banking Committee Chair Tim Scott previously proposed abolishing the office during negotiations over a party-line tax bill, though procedural rules prevented the measure from advancing.
Democrats, however, warn that weakening the office could reduce oversight during a period of market stress. Sen. Elizabeth Warren said the move comes as risks in credit markets intensify, calling it “gutting the office designed to evaluate financial risks.”
Private credit concerns in focus
The restructuring unfolds amid turbulence in private credit markets. Several large funds have recently limited investor withdrawals as outflows accelerated. In a recent report, the OFR estimated that lending exposure to private credit entities ranges between $410 billion and $540 billion.
Federal Reserve Chair Jerome Powell said the central bank is monitoring developments but does not currently view the situation as a systemic threat.
The future scale and influence of the OFR will likely depend on how financial markets evolve in the coming months and whether policymakers determine that reduced staffing can still support the council’s risk-monitoring mandate.