FILE PHOTO: Signage is seen at the Consumer Financial Protection Bureau (CFPB) headquarters in Washington, D.C., U.S., May 14, 2021. REUTERS/Andrew Kelly/ File Photo

By Douglas Gillison

WASHINGTON (Reuters) - The U.S. Consumer Financial Protection Bureau warned staff on Wednesday the agency may soon need to eliminate some of its workforce because of new funding limits imposed this year by Congress, according to an email seen by Reuters.

The announcement comes as the agency faces a self-imposed funding crunch, with staff concerned there may be insufficient cash on hand to meet payroll and severance costs in the new fiscal year starting next month, according to two people familiar with the matter.

Representatives for the CFPB did not immediately respond to a request for comment. President Donald Trump's administration is battling in court for authorization to proceed with plans to eliminate most of the CFPB's workforce.

In an agency-wide email, the CFPB's human resources office said it would not proceed with plans to restructure the agency before federal courts have finally ruled on them. But the agency was nevertheless evaluating "workforce optimization opportunities" to match the new funding limits set by Congress, it said.

"This evaluation includes considering a possible reduction in force ... action," it said, urging staff members to be certain the most up-to-date versions of their resumes were on file with the agency in the event their positions are eliminated.

Since Trump fired former CFPB Director Rohit Chopra in February, the CFPB's new leadership has twice attempted to cut the vast majority of staff at the agency, which Trump and senior administration officials have accused of politicized enforcement and exceeding its legal authorities. In court, lawyers for employee unions and consumer advocates have called the restructuring illegal.

Acting CFPB Director Russell Vought in February declined to request additional funding from the Federal Reserve for the final fiscal quarter of this year, saying the agency had sufficient resources to continue operating. With its plans to eliminate staff on hold, it has continued to pay the wages of most agency employees, however.

The CFPB draws its funding from the Federal Reserve, not taxpayer funds. However, Congress this summer reduced the maximum the CFPB may request to 6.5% of the Fed's expenses, rather than 12%, reducing the maximum available to the agency by hundreds of millions of dollars.

(Reporting by Douglas Gillison in Washington; Editing by Chris Reese, Rod Nickel)