Judge rules White House must continue to fund CFPB

"The White House cannot lapse in its funding of the Consumer Financial Protection Bureau, a federal district court judge ruled on Tuesday, only days before funds at the bureau would have likely run out and the consumer finance agency would have no money to pay its employees. Judge Amy Berman ruled that the CFPB should continue to get its funds from the Federal Reserve, despite the Fed operating at a loss, and that the White House's new legal argument about how the CFPB gets its funds is not valid."

"At the heart of this case is whether Russell Vought, President Donald Trump's budget director and the acting director of the CFPB, can effectively shut down the agency and lay off all of the bureau's employees. The CFPB has largely been inoperable since President Trump has sworn into office nearly a year ago. Its employees are mostly forbidden from doing any work, and most of the bureau's operations this year have been to unwind the work it did under President Biden and even under Trump's first term."

"The National Treasury Employees Union, which represents the workers at the CFPB, has been mostly successful in court to stop the mass layoffs and furloughs. The union sued Vought earlier this year and won a preliminary injunction stopping the layoffs while the union's case continues through the legal process. In recent weeks, the White House has used a new line of argument to potentially get around the court's injunction."

Judge Amy Berman ordered continued funding of the Consumer Financial Protection Bureau through the Federal Reserve, averting an imminent lapse that would have left the agency unable to pay employees. The ruling rejected the White House's new legal argument about the CFPB's funding mechanism even though the Fed has been operating at a paper loss. The dispute centers on whether Russell Vought, acting CFPB director, can shut down the bureau via a reduction in force. The National Treasury Employees Union obtained a preliminary injunction to stop mass layoffs while litigation continues.

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