Trump Gets Nod to Fire Most CFPB Workers as Court Lifts Hold (3)

The Trump administration can proceed with plans to fire most of the Consumer Financial Protection Bureau’s employees after a US appeals court vacated a federal judge’s order halting the moves.

The split decision Friday from the US Court of Appeals for the District of Columbia Circuit would allow the administration to lay off hundreds of employees who regulate banks, fintechs, and other financial companies while the litigation proceeds.

“The district court lacked jurisdiction to consider the claims predicated on loss of employment,” Judge Gregory Katsas wrote for the majority, joined by Judge Neomi Rao.

Additional claims brought against the Trump administration under the Administrative Procedure Act didn’t properly target a final agency action, and plaintiffs also failed to raise adequate constitutional questions to warrant review by the panel, Katsas said.

The CFPB didn’t immediately respond to a request for comment.

“Without the full force of the Consumer Financial Protection Bureau—an agency Congress created specifically to protect consumers—millions will lose critical safeguards against predatory financial practices,” said Jennifer Bennett, principal at Gupta Wessler LLP representing the NTEU and its co-plaintiffs, in an emailed statement.

Katsas and Rao ruled to lift the preliminary injunction that put the CFPB firings on hold and remand the case to the lower court for further proceedings.

The DC Circuit sided with the Trump administration’s “effort to dismantle the CFPB and rein in crippling Obama-era regulations,” Attorney General Pam Bondi said in a post on X. CFPB and Department of Government Efficiency officials have denied in past filings that they plan to shutter the agency entirely.

“The CFPB is now free to right-size itself in accordance with the law to best serve the American people,” she said in a subsequent X post.

Judge Cornelia T.L. Pillard dissented, highlighting how the lower court’s injunction preserved status quo at the agency to prevent its destruction while adjudicating whether the administration’s plan to dismantle it was lawful.

“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,” she said in her dissent.

The decision adds to a sprawling battle playing out in courts over the Trump administration’s attempt to fire tens of thousands of federal employees. The US Supreme Court on July 8 lifted an order that temporarily shielded workers at around 20 other agencies from termination.

“Today’s divided panel decision willfully ignores the Trump Administration’s unprecedented and lawless attempt to destroy an agency created by Congress that has helped millions of families across the country,” Sen. Elizabeth Warren (D-Mass.), the ranking member of the Senate Banking Committee, said in an emailed statement. “Fortunately, the Administration cannot yet resume its illegal attempt to shut down the CFPB: The court’s rules make clear the panel decision won’t take effect until the plaintiffs have a chance to ask the full D.C. Circuit to review the case.”

The appeals court withheld its mandate for seven days, providing time for a petition for rehearing by the panel or en banc. The preliminary injunction will remain in effect during that weeklong period after a rehearing petition is filed, with the potential to extend.

“I suspect the union is going to file a petition for rehearing en banc, which will stay everything,” said Joann Needleman, leader of the consumer financial services regulatory and compliance practice at Clark Hill PLC, who formerly served as a member of the CFPB Consumer Advisory Board. “Petitions for rehearing take a long time, but they’re going to come out to the same point.”

Mass Layoffs

CFPB leaders including acting chief Russell Vought took steps starting in February to lay off most of the agency’s roughly 1,700 employees, in what the Trump administration defends as an effort to streamline the consumer finance watchdog.

The mass firings and other moves to shutter the agency—including contract cancellations and data purges—drew a lawsuit from the National Treasury Employees Union, which represents most CFPB employees, and other co-plaintiffs including the NAACP.

“It’s just going to be a shell of itself,” Needleman said. “There’s going to be very little enforcement and little to no rulemaking. You need lots of people, data, and research.”

Judge Amy Berman Jackson in the US District Court for the District of Columbia issued a preliminary injunction in March putting the CFPB shutdown moves on hold, cautioning that the Trump administration was likely to destroy the agency entirely before she had a chance to rule on the merits of the legal challenge.

After briefly narrowing the scope of Jackson’s injunction, the DC Circuit panel reinstated the order shortly after the CFPB attempted a drastic reduction-in-force plan meant to slash the majority of the agency’s headcount.

The NTEU and its co-plaintiffs argued the administration violated constitutional separation of powers by moving unilaterally to eliminate an agency created by Congress, with specific statutory duties mandated by the 2010 Dodd-Frank Act. They also challenged the moves by CFPB leaders as being arbitrary and capricious under the Administrative Procedure Act.

Lawyers for the Trump administration argued Jackson’s injunction was an overly broad encroachment on a federal agency’s efforts to downsize in accordance with the president’s policy directives. They also denied there was ever a final, discrete action subject to an APA challenge and said CFPB leaders are maintaining functions required by Dodd-Frank.

“All Dodd-Frank says is you have to have an agency and here’s the authority of the agency,” Needleman said. “Dodd-Frank is silent as to how to carry that out.”

The NTEU and its co-plaintiffs are also represented by Public Citizen Litigation Group.

The case is NTEU v. Vought, D.C. Cir., No. 25-05091, 8/15/25.