Updated @ 3:36 PM EDT on August 15, 2025
The Consumer Financial Protection Bureau’s plan to fire the great majority of its staff can go forward, according to a three-judge panel of the federal appeals court.
The issue relates to the Trump administration’s mid-April force reduction at the bureau, which resulted in the sending of layoff letters to over 1,400 employees, leaving only roughly 200 workers left. The U.S. Court of Appeals for the D.C. Circuit ruled 2-1 on Friday, allowing the Trump administration to proceed with its bureau dismantling.
“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 established in the Civil Service Reform Act,” judge Gregory Katsas stated in the majority opinion. A preliminary injunction that had prevented the layoffs is revoked by the decision.
Nina Pillard, however, disagreed. “It is untenable to hold that same Congress meant the agency’s continued existence to be a matter of unilateral and unexplained presidential edict,” she said in the opinion that dissented.
“Had the district court not acted, there is very little reason to believe that the CFPB would have existed by the end of March,” she said.
Former President Obama nominated Pillard for her position, whereas President Trump nominated Judge Neomi Rao and Katsas.
The panel postponed the implementation of its decision until seven days following the resolution of any rehearing motions, which need to be submitted within forty-five days.
The Federal Reserve System provides transfers to the CFPB, an autonomous organization.
The CFPB was established by Congress as part of the bipartisan Dodd-Frank Act during the 2008 financial crisis, and it is legally required to carry out dozens of duties to safeguard consumers. Its duties include specific criteria such as running an office that gathers and tracks consumer complaints, as well as its objective to oversee consumer financial products and services.
The Trump administration, along with some on Wall Street and in Silicon Valley, have turned their attention toward the CFPB, claiming that it goes too far in its regulation.The government has stated in court documents that it wants a “more streamlined” bureau. However, consumer groups claim that the CFPB would be unable to carry out its Congressionally mandated responsibilities as a result of the significant staff reduction.
U.S. Attorney General Pamela Bondi wrote on social media, “The CFPB is now free to right-size itself in accordance with the law to best serve the American people.”
Cat Farman, head of the CFPB union, described the decision as “a disgrace.”
In a statement, Farman added, “It gives Donald Trump the authority to unilaterally abolish essential public services that Congress established.” “We cannot watch helplessly as Donald Trump and [CFPB Acting Director] Russ Vought dismantle the organization that shields working Americans from financial predators. When it comes to protecting the rule of law from executive overreach and the hard-earned wages of working people from Wall Street greed, CFPB employees aren’t giving up.”
Now-Sen. Elizabeth Warren (D-Mass.), who created the CFPB, criticized the court’s decision on Friday. “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,” she said in a statement.
In a statement, former CFPB deputy assistant director Mike Pierce also harshly condemned the decision. “As Wall Street and Big Tech continue to perpetrate fraud and abuse, the CFPB is the final line of defense for honest businesses and working families. As Trump’s economy collapses, Americans will have no one to protect them if Trump and Vought are successful in dismantling the CFPB,” he said. At the moment, Pierce serves as the Student Borrower Protection Center’s executive director.
A long legal battle
Employees of the CFPB are represented by the National Treasury Employees Union, which claims that the Trump administration is illegally dismantling the agency. In a brief, the union’s lawyers stated that “an agency established by Congress may not be unilaterally abolished by the Executive Branch.”
To halt the layoffs, the union filed a lawsuit. However, on April 11, the DC Circuit Appellate Court decided that CFPB officials might reduce the number of personnel provided they conducted “a particularized assessment” to identify those who were “unnecessary” for the bureau to carry out its statutory tasks.
The administration quickly took action to terminate the majority of the bureau’s employees once more after that decision.
In April, CFPB chief legal counsel Mark Paoletta said, “An agency with about 200 employees enables the Bureau to carry out its statutory responsibilities and better fits with the new leadership’s priorities and management philosophy.”
In a memo sent to staff on April 16, Paoletta stated that the Bureau would deprioritize areas like medical debt, student loans, peer-to-peer lending, and digital payments in order to “focus on tangible harms to consumers,” shift resources away from enforcement and supervision that can be done by the States, and concentrate more on banks and mortgage fraud.
However, the reductions in the second attempted layoff were not “particularized” enough in the opinion of federal judge Amy Berman Jackson. “There is reason to believe that the defendants simply spent the days immediately following the Circuit’s relaxation of the Order dressing their RIF [reduction in force] in new clothes, and that they are thumbing their nose at both this Court and the Court of Appeals,” Jackson wrote, and blocked the layoffs by ordering an injunction.
Because of the order, impacted employees have been permitted to stay with the organization. However, it appears that there is less work to be done: The CFPB has deprioritized other enforcement actions and dropped other cases it was pursuing.
The CFPB’s budget was roughly halved when the One Big Beautiful Bill Act was passed in early July, but it still has the authority to ask Congress for money.
According to NTEU 335, the union that represents CFPB employees, the Supreme Court’s recent ruling that the Trump administration may continue to fire federal employees in large numbers has no bearing on this case.
The workers’ union may file an appeal with the entire DC Circuit and ultimately the U.S. Supreme Court.
Copyright 2025 NPR
