A federal appeals court has cleared the way for the Consumer Financial Protection Bureau to move forward with plans to lay off more than 1,400 employees; a move that could shrink the agency to roughly 200 staffers and, critics warn, cripple its ability to function.
Driving the news:
- In a 2-1 decision, the Court of Appeals for the D.C. Circuit vacated a lower court’s injunction that had blocked the layoffs.
- The ruling stems from the Trump administration’s April reduction-in-force plan targeting the vast majority of CFPB staff as part of a broader deregulatory agenda.
- Writing for the majority, Judge Gregory Katsas said employment-related claims must go through the Civil Service Reform Act’s specialized review process, meaning the district court had no jurisdiction to halt the layoffs.
- Judge Nina Pillard dissented, warning that allowing the cuts to proceed could leave the CFPB’s survival to “unilateral and unexplained presidential edict.”
What they’re saying:
- The administration argues the cuts will create a “more streamlined” CFPB, focusing on areas like bank oversight and mortgage fraud, while deprioritizing others such as medical debt, student loans, peer-to-peer lending, and digital payments.
- U.S. Attorney General Pamela Bondi posted that the CFPB is now free to “right-size itself” in line with the new leadership’s vision.
- The National Treasury Employees Union, representing CFPB staff, says the administration is dismantling the bureau unlawfully and may appeal to the full D.C. Circuit or the Supreme Court.
- “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,” wrote Judge Pillard.
What’s next: The plaintiffs have 45 days to ask for an en banc rehearing before the full D.C. Appeals Court.
