A federal appeals court on Friday overturned a lower court ruling that had blocked the Trump administration from dismantling the Consumer Financial Protection Bureau (CFPB). This decision now allows the government to resume mass firings at the agency.
In a 2-1 ruling, the U.S. Court of Appeals for the District of Columbia Circuit said that workers’ unions and consumer groups using CFPB services did not have the right to bring the case to federal court. The lower court judge went beyond their authority when they temporarily blocked the dismantling of the CFPB.
“We hold that the district court lacked jurisdiction to consider the claims predicated on loss of employment, which must proceed through the specialized-review scheme” under civil service laws, U.S. Circuit Court Judge Gregory Katsas wrote for the majority, joined by Circuit Judge Neomi Rao.
“If the plaintiffs’ theory were viable, it would become the job of the courts, rather than the Executive Branch, to decide what resources an agency needs to perform its functions,” Katsas said.
The court noted that its decision would not take effect immediately, giving lawyers representing CFPB workers and consumer groups time to appeal. This means any termination notices are on hold for now.
Still, the ruling affects about 1,500 CFPB employees. A trial court had blocked the firings in April, saying the layoffs violated a March injunction that temporarily stopped the administration from shutting down the agency.
Although the administration claimed it would keep the agency in a smaller form, officials have publicly discussed dismantling it completely.
Katsas and Rao, both appointed by President Donald Trump, also said the administration aimed to eliminate the CFPB but overruled the lower court because it did not have jurisdiction to stop the mass firings.
Circuit Judge Cornelia Pillard, appointed by former President Barack Obama, disagreed. In her dissent, she said the lower court acted correctly in blocking the administration.
“But it is not within the President or his appointees’ discretion to decide that the country would benefit most if there were no Bureau at all,” Pillard wrote.
Pillard added, “The idea that courts cannot stop the President from abolishing federal agencies cannot be reconciled with either the constitutional separation of powers or our nation’s commitment to a government of laws.”
Jennifer Bennett, an attorney for the plaintiffs, said the ruling could leave the public unprotected from harmful financial practices.
“Without the full force of the Consumer Financial Protection Bureau—an agency Congress created to protect consumers—millions could lose critical safeguards against predatory financial practices,” Bennett said. “If this decision stands, it will give more power to corporations at the expense of American families.”
The court also said that other objections from the plaintiffs did not challenge final decisions made by the agency and could not be reviewed in court.
The CFPB, created after the 2008 financial crisis, had been targeted by Elon Musk, who led the Department of Government Efficiency before stepping down earlier this year.
Office of Management and Budget Director Russell Vought, chosen by Trump as acting director of the CFPB, quickly tried to dismantle the agency.
