All offices at the agency were hit, led by enforcement, supervision, research, technology and fair lending, according to current and former employees who spoke on condition of anonymity and received the notices. 

Fox Business News first reported the layoffs, which the outlet put at 1,500 to 1,700, and which would leave the agency with roughly 200 employees. 

Vought said in a note to laid-off employees that the changes are "necessary to restructure the Bureau's operations to better reflect the agency's priorities and mission."

"Anybody should expect a letter at any time for the rest of this administration," one CFPB staffer said Thursday. "It's the sword of Damocles." 

The layoffs come just days after a three-judge panel of the U.S. Court of Appeals for the District of Columbia issued a partial stay of a preliminary injunction that had prohibited the agency from issuing reductions in force. The panel ruled that future CFPB firings must be subject to an "assessment" of whether the workers are "unnecessary" to perform the bureau's legally mandated duties.

The day before, CFPB's Chief Legal Officer Mark Paoletta scaled back the scope of the agency's work in a memo to the staff listing 11 priorities for the year. Paoletta in the memo said the bureau would refocus its efforts on supervising large banks over nonbank competitors. 

It's not clear where the courts will ultimately fall on the CFPB's statutory requirements on supervising nonbanks. The Dodd-Frank Act states specifically that the bureau "shall require reports and conduct examinations on a periodic basis" of non-depositories within its jurisdiction.

The move to terminate the bulk of the CFPB's staff drew criticism from consumer groups, who said the layoffs amount to essentially shuttering the bureau. 

"Sabotaging the CFPB by firing almost 90% of its remaining civil servants who protect Americans from corporate crime is hardly the 'individualized' or 'particularized' assessment that the court required the CFPB to undergo," said Erin Witte, director of consumer protection for the Consumer Federation of America. "These mass layoffs combined with the April 16 memo provide a blueprint for would-be cheats and lawbreakers about which laws they can violate without being held accountable by our nation's supposed consumer finance watchdog."

Demand Progress Education Fund said the layoffs have "effectively killed the CFPB." 

"What they're doing is systematically gutting all efforts to protect service members, and all Americans, from fraud and scams while simultaneously letting Wall Street, Big Banks and Big Tech off the hook," said Emily Peterson-Cassin, corporate power director at Demand Progress Education Fund. "The CFPB has heard hundreds of thousands of complaints from service members, veterans and their families and has returned nearly more than $180 million back to those communities. If the administration actually cared about them, they wouldn't have fired most of the people responsible for protecting them."