A federal judge said Friday she would block planned mass firings at the Consumer Financial Protection Bureau.
Judge Amy Berman Jackson of the U.S. District Court for the District of Columbia said at a hearing Friday she was concerned that the Trump administration is not complying with a preliminary injunction she issued last month to keep the CFPB intact while the court considers a lawsuit against CFPB acting director Russ Vought accusing him of trying to hobble the agency, according to published reports.
Jackson said she will prevent the CFPB from slashing its workforce by roughly 88 percent as indicated by a notice from Vought to CFPB staff on Thursday. Vought reportedly intends to cut the agency’s staff from about 1,700 to 200.
House Financial Services Committee ranking member Maxine Waters, D-Calif., praised Jackson in a statement “for recognizing this latest move for what it is: yet another illegal effort to gut the agency altogether.”
Waters added that President Donald Trump and billionaire special adviser Elon Musk, who heads the Department for Government Efficiency, are trying to “dramatically scale back the CFPB’s supervision and enforcement work. The Trump Administration is sending another message to bad-acting big banks and other predatory institutions that it is open season on our nation’s working-class families.”
The National Treasury Employees Union filed the lawsuit against Vought on behalf of CFPB employees. On Thursday, the NTEU filed a separate motion with the court asking that the administration demonstrate it is not violating Jackson’s preliminary injunction.
The U.S. Court of Appeals for the District of Columbia Circuit in an April 11 order upheld most of Jackson’s preliminary injunction. But it allowed the administration to terminate CFPB employees who Vought determines after individual assessments are not necessary to the CFPB’s statutory duties.
The NTEU argues that the appeals court gave the Trump administration an inch to continue CFPB downsizing, and instead, it is taking a mile by eliminating some 1,500 positions.
The union said it has been told entire offices, “including statutorily mandated ones,” have been or soon will be eliminated or reduced to a single person. All affected employees were scheduled to be cut off from computer access as of 6 p.m. today. That move has been halted by Jackson.
“These RIFs [reductions in force] appear to go well beyond what the unstayed portions of this Court’s injunction permit,” the NTEU motion states. “It is unfathomable that cutting the Bureau’s staff by 90 percent in just 24 hours, with no notice to people to prepare for that elimination, would not ‘interfere with the performance’ of its statutory duties, to say nothing of the implausibility of the defendants having made a ‘particularized assessment’ of each employee’s role in the three-and-a-half business days since the court of appeals imposed that requirement.”
The leaders of the Senate Banking Committee have split on the administration’s attempt to slash CFPB. Ranking member Elizabeth Warren, D-Mass., said vulnerable consumers are being put at risk.
“President Trump just gutted almost all CFPB staff, so the agency can’t do its job of helping Americans who get scammed by big banks and giant corporations,” Warren said in a statement. “Dismantling the CFPB in the face of a court order blocking an illegal shutdown is yet another assault on consumers and our democracy by this lawless Administration, and we will fight back with everything we’ve got.”
Democrats frequently cite the approximately $21 billion the CFPB has returned to harmed consumers since its inception in 2010 as evidence that it is performing its duties well.
Senate Banking Chair Tim Scott, R-S.C., backs efforts to streamline the CFPB, asserting that it has frequently exceeded its regulatory authority.
“Everything we can do to shrink the size of the CFPB, the better off the average consumer is,” Scott said at American Bankers Association conference on April 8. “For an agency that’s supposed to protect the consumers, it made it very hard on consumers and especially hard on small businesses.”
Vought has essentially throttled the CFPB since taking over as acting director in early February. The Senate Banking Committee approved the nomination of Jonathan McKernan to be the next CFPB director on March 6, but he has not yet received a vote on the Senate floor.
At the ABA conference, Scott said McKernan’s confirmation would come after the CFPB had achieved its “right size.”
As the administration moves to shrink the CFPB, Republican lawmakers said they hope to rein it in through the budget reconciliation process. Scott said potential provisions in a reconciliation package could include capping the amount of money allocated to the CFPB and changing it from a director-led agency to one that is governed by a bipartisan commission.
“Everything we can do to move the CFPB into the normal congressional process from a budgeting perspective and oversight is better for the American consumer,” Scott said at the ABA conference.
The title of the Consumer Financial Protection Bureau was corrected.
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