D.C. Circuit Court Rules Trump Can Downsize Consumer Financial Protection Bureau

The ruling allows Trump to proceed with plans to implement layoffs at the CFPB and enables Office of Management and Budget Director Russell Vought to adjust the agency’s funding. The majority opinion, authored by Judge Gregory Katsas, a Trump appointee, stated that Jackson lacked jurisdiction to consider the claims made by plaintiffs regarding employment loss.

“The claims must proceed through the specialized-review scheme established in the Civil Service Reform Act,” Katsas wrote. He also noted that the plaintiffs’ arguments did not target final agency actions that could be reviewed under the Administrative Procedure Act (APA).

The CFPB was established over a decade ago under the Dodd-Frank Act to oversee consumer financial products and services. Critics, including those from The Heritage Foundation, have argued that the agency possesses excessive regulatory power, which they claim restricts consumer choices.

In her dissent, Judge Cornelia Pillard expressed concern about the implications of the ruling. “It is emphatically not within the discretion of the President or his appointees to decide that the country would benefit most if there were no Bureau at all,” she stated, emphasizing the importance of the CFPB’s role in consumer protection.

Following the panel’s decision, plaintiffs filed an emergency application with the D.C. Circuit seeking to prevent the ruling from taking effect. This move indicates ongoing legal battles surrounding the agency’s future and the Trump administration’s regulatory agenda.

The ruling has drawn mixed reactions. Supporters of the decision argue that it restores presidential authority over federal agencies, while critics warn it could undermine consumer protections established in the wake of the 2008 financial crisis.

The D.C. Circuit’s decision is part of a broader trend in which the Trump administration has sought to reduce the size and scope of federal regulatory agencies. The CFPB has been a focal point in this effort, with proponents of downsizing arguing that it has overreached its mandate.

As the legal proceedings continue, the implications of this ruling could reshape the regulatory landscape for consumer financial services in the United States. The CFPB’s future remains uncertain as both sides prepare for further legal challenges.