Appeals court allows Trump administration to resume CFPB dismantling
A federal appeals court panel on Friday overturned a judge’s block on the Trump administration’s dismantling of the Consumer Financial Protection Bureau (CFPB), paving the way for mass layoffs to resume.
The U.S. Court of Appeals for the District of Columbia Circuit panel voted 2-1 that employee unions and groups that use CFPB services have no right to bring their challenge in federal court.
It lifts a block that for months has prevented the CFPB from conducting planned layoffs affecting at least 80 percent of the bureau’s remaining workforce and terminating contracts.
“If the plaintiffs’ theory were viable, it would become the task of the judiciary, rather than the Executive Branch, to determine what resources an agency needs to perform its broad statutory functions,” wrote U.S. Circuit Judge Gregory Katsas, a Trump appointee.
Katsas was joined in the majority by U.S. Circuit Judge Neomi Rao, also a Trump appointee.
U.S. Circuit Judge Cornelia Pillard dissented, calling the decision “untenable.”
“The notion that courts are powerless to prevent the President from abolishing the agencies of the federal government that he was elected to lead cannot be reconciled with either the constitutional separation of powers or our nation’s commitment to a government of laws,” Pillard, who was appointed to the bench by former President Obama, wrote.
The CFPB became an early target of former White House aide Elon Musk as the Department of Government Efficiency (DOGE) sought to reshape the federal bureaucracy, agency by agency.
Office of Management and Budget (OMB) Director Russell Vought was tapped by President Trump to serve as CFPB’s acting director, where he quickly looked to dismantle the agency that was established following the 2008 financial crisis.
Vought stopped the CFPB from drawing down more funding and took other drastic steps, including issuing stop work orders, cancelling the lease of the agency’s headquarters and planning mass layoffs.
In March, U.S. District Judge Amy Berman Jackson barred the administration from moving forward and required that fired employees be reinstated. She also ordered some cancelled contracts be restored.
The judge's ruling came in response to a lawsuit brought by two unions that represent CFPB employees, the National Treasury Employees Union and the CFPB Employee Association. They sued alongside the National Association for the Advancement of Colored People, the National Consumer Law Center and the Virginia Poverty Law Center, which use CFPB's services.
Eva Steege, a Lutheran pastor given months to live by her doctors, also joined. Steege raised concerns she couldn't discharge her student loan debt before her death because the CFPB cancelled her meeting with the student loan ombudsman's office in the wake of the dismantling. Steege died March 15.