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A federal judge in Washington temporarily ordered the Trump administration to halt efforts to dismantle the Consumer Financial Protection Bureau (CFPB) on Friday, barring officials from laying off staff, deleting data, or emptying its reserve funds.
The ruling came in response to a union lawsuit, which alleged that the Trump administration was planning to hollow out the CFPB by firing 95% of its workers while canceling the lease on its Washington, D.C., headquarters. If successful, the mass layoffs would have left behind only the skeleton of an agency charged with policing the way large banks and other financial services companies like payday lenders and credit bureaus handle customers.
The CFPB is currently shuttered after acting Director Russell Vought ordered staff to stop virtually all work and stay home from the office this week. It had also begun laying off dozens of staff and canceling contracts with vendors and expert witnesses.
Administration officials have been open about their goal of eliminating the agency: After members of his DOGE team arrived at its headquarters last week, billionaire Elon Musk posted, “RIP CFPB,” while President Donald Trump told reporters on Tuesday that it was “very important to get rid of.”
“It was also a waste,” he said. “There was a bad group of people running it. … That was a vicious group of people. They destroyed a lot of people.”
The temporary order by Senior Judge Amy Berman Jackson of the US District Court for the District of Columbia will not lift Vought’s work stoppage. But the plaintiffs, which include a federal employees union as well as nonprofits that work with the CFPB, nonetheless celebrated the development.
“Doing away with this critical agency would massively increase fraud, the scourge that Musk allegedly aims to curtail, along with supercharging scams, excess fees and charges, and assorted ripoffs,” said Lisa Gilbert, co-president of the progressive group Public Citizen, whose attorneys represented some of the plaintiffs. “Today a judge halted the illegal move by the administration to stop the critical work of the CFPB.”
The lawsuit, originally filed on Thursday, argued that the mass layoffs would leave the bureau unable to perform its basic functions required by law. In an accompanying filing, the agency’s former chief technologist also warned that deleting its internal data risked permanently harming its ability to regulate financial institutions and assist consumers.
“Trump and Vought’s actions to disable the CFPB have already caused mass confusion and imposed significant and irreparable harm on consumers across the country,” the lawsuit states. “Absent immediate relief, the defendants will continue to upend the lives of countless civil servants.”
Among other tasks required by statute, the CFPB has paused all of its supervision over banks and other lenders, the lawsuit notes. The agency’s portal for consumer complaints has also been “severely disrupted.” The agency typically receives hundreds of thousands of complaints each month.
According to the suit, Vought has been planning to return the CFPB’s operating reserves back to the Federal Reserve, which funds the agency. Over the weekend, he informed the Fed that the consumer watchdog would not require any new funding for the coming quarter because he planned to spend down its reserves.
The lawsuit did not cite a source about the mass firings, but rumors have swirled among current and former staffers that mass firings may be imminent. It states that Trump officials have “reportedly informed the General Services Administration that they are terminating the lease of the CFPB’s headquarters.”
The clash over the CFPB is shaping up to be another key test of the Trump administration’s power to unilaterally reshape the federal bureaucracy. The agency was created by Congress as part of 2010’s Dodd-Frank Act, partly in order to prevent the sorts of predatory lending practices that had contributed to the 2007-2008 housing and financial crisis.
The lawsuit argues that by tearing the agency down to less than its studs, the Trump administration is attempting to “usurp” powers reserved for Congress and failing to faithfully execute the laws as required by the Constitution. The CFPB “can be eliminated only by Congress,” it states.
The CFPB is not the only part of the government facing mass layoffs. Agencies have begun letting go thousands of probationary employees, who have worked in the government for less than a year and are legally easier to dismiss than their colleagues with longer tenures. Department of Housing and Urban Development leaders have been told to lay off 50% of its workforce, per Bloomberg Law.
But courts have already stepped in to at least temporarily stop some firings. On Thursday, a federal judge extended his order blocking the Trump administration from putting thousands of USAID employees on administrative leave as part of its efforts to wipe out the agency.
A hearing for a longer preliminary injunction that could block the Trump administration’s attempts to curtail the CFPB is scheduled for early next month.
Jordan Weissmann is a Senior Reporter at Yahoo Finance.
This post has been updated.
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