WASHINGTON—A federal judge has blocked the Trump Administration from allowing the CFPB to run out of money, rejecting a last-minute legal argument that would have effectively shut down the consumer watchdog just days before it was set to exhaust its funds.
U.S. District Judge Amy Berman ruled Tuesday that the CFPB must continue receiving funding from the Federal Reserve, even though the Fed is currently operating at a loss, and said the White House’s new interpretation of the bureau’s funding authority does not hold up legally, the Associated Press reported.
The decision strikes at the center of a broader effort by the Administration to dismantle the CFPB under the leadership of Russell Vought, President Donald Trump’s budget director and the agency’s acting director. Since Trump returned to office nearly a year ago, the Bureau has been largely sidelined, with employees restricted from performing most duties and agency activity focused mainly on unwinding work completed during the Biden administration and Trump’s first term.
Vought has openly signaled his desire to wind down the agency, and earlier this year the White House announced a CFPB “reduction in force” that would have furloughed or terminated much of its workforce, AP noted.
That effort has been repeatedly blocked in court. The National Treasury Employees Union, which represents CFPB staff, secured a preliminary injunction earlier this year preventing mass layoffs while its lawsuit against Vought proceeds.
More recently, the Administration attempted to bypass that injunction by advancing a new argument: that the Federal Reserve lacks sufficient “combined earnings” to continue funding the CFPB. Under statute, the Bureau receives its operating budget through quarterly transfers from the Fed rather than through congressional appropriations, AP reminded.
Judge Berman rejected that rationale, clearing the way for continued funding and keeping the CFPB afloat as the underlying legal fight over its future continues, AP concluded.