CFPB may make mass dismissals, the rules of the Federal Court of Appeal

A federal court of appeal authorizes the Trump administration to take up the plans to dismiss most of the employees of the Consumer Financial Protection Bureau.

Friday, the American court of appeal for DC raised a preliminary injunction of a lower court, allowing the CFPB to carry out plans aimed at eliminating 80% of its workforce thanks to a strength reduction. In the meantime, the case will be referred to the lower court for new procedures.

The Trump administration plans to reduce the financial monitoring agency to a workforce of approximately 1,700 employees to around 200 employees to carry out legally required activities.

The majority of a panel of three judges judged that the lower court “lacked jurisdiction to examine complaints based on employment loss” and that the complainants representing CFPB employees – including the National Treasury Employees Union and the CFPB Employee Association – could contest the individual lay people before the Merit Systems Protection Board or the Federal Labor Relations Author.

Other complainants, who joined the trial on the grounds that a reduced CFPB would not be able to continue to provide legally compulsory services to the public, could continue under the Act respecting the administrative procedure, once they can demonstrate that “service has been illegally refused or delayed”.

“Such challenges would target a specific action or inaction from the agency which would be illegal and harm the specific individual complainants,” wrote Gregory Katsas for the majority. Judge Neomi Rao, the former head of the information office and regulatory affairs under the first Trump administration, also ruled in favor of the majority.

Judge Cornelia Pillard, however, wrote in her dissent that the complainants could probably not obtain this type of relief from the CFPB, if it “definitively destroyed the precious resources on which the office had long been counting to understand and solve the problems that Congress established it to resolve”.

“It will be a cold comfort for the complainants if they finally succeed on the bottom of their challenge to the CFPB stop to discover that the defendants put the agency in a hole from which it can never recover completely,” wrote Pillard. “It would be the effect of the agency’s decisions to dismiss all or almost all employees who used to work in the agency, the termination of all the contracts that supported their work, to serve all the data they have raised and ghosts all the experts and organizations with which they had established beneficial labor relations.”

Even if the CFPB was trying to restore its full capacity after these cuts occurred, Pillard added that “at best, the deceased agency would be confronted with a reconstruction process of several years”.

The National President of the NTEU, Doreen Greenwald, said in a press release that the Court of Appeal “inexplicably opened the way to a large -scale reduction in force and a dismantling of operations at the Office of Financial Protection of Consumer.”

“Nteu undertakes to continue the fight for CFPB employees and their work on behalf of the American people,” said Greenwald.

The office, which was created in 2011, has returned more than $ 21 billion to consumers.

The acting director of the CFPB, Russ Vought, closed the agency’s registered office in February and ordered employees to “do not perform work tasks” without the prior approval of the agency’s legal adviser. The agency’s legal advisor later said that employees “should carry out the work required by law and do not need to request prior approval to do so”.

The CFPB dismissed 85 employees probationary and 130 employees, including its student of student loan, and planned to dismiss around 80% of its remaining staff via a Rif.

The agency also canceled the contracts and ended its lease on the agency’s head office, choosing to move to a smaller space.

A district court granted a preliminary injunction on March 28. The court concluded that the government was “engaged in a concerted and accelerated effort to close the agency” and that it had “no intention to exploit the CFPB”.

The preliminary injunction forced the CFPB to restore all probation and ultimately dismissed employees, refrain from any work stoppage and cancel the contract layoffs.

The Court of Appeal published a partial suspension in April which allowed the CFPB to dismiss employees or to stop the work if the agency determined “that the employees or the work in question were not necessary for the execution of the statutory functions of the office”. A few days later, CFPB sent Rif’s opinions to more than 80% of its workforce.

Katsas wrote in the opinion of the majority that the partial suspension order of the Court of Appeal “immediately involved the courts in matters of compliance on the number of necessary employees – a determination according to which the judicial power is neither authorized nor competent to be made.”

Copyright © 2025 Federal News Network. All rights reserved. This website is not intended for users located in the European Economic Area.