On Friday, a US appeals court gave the Trump administration permission to fire large numbers of employees from a bank regulator that was established in the wake of the 2008 financial crisis.
Significant personnel reductions at the Consumer Financial Protection Bureau, a watchdog for banks and fintech firms that has long been singled out by congressional Republicans and far-right Trump supporters, are made possible by the decision.
By a 2-1 vote, the appeals court panel annulled a preliminary injunction issued by a US district court in March that had given a lifeline to agency staff. Labor unions representing CFPB workers had argued that Trump appointees’ mass downsizing of CFPB effectively destroyed the agency, overstepping constitutional authority.
“We hold that the district court lacked jurisdiction to consider the claims predicated on loss of employment,” said the ruling. “Accordingly, we vacate the preliminary injunction.”
Judges Gregory Katsas and Neomi Rao, who were appointed to the court by Trump during his first term, supported the decision.
Judge Cornelia Pillard, who was appointed by Democrat Barack Obama in 2013, dissented, supporting the district court’s finding that a significant reduction in the CFPB’s size amounted to the agency’s demise.
While the president holds great influence over the CFPB, the administration does not have the power to “decide that the country would benefit most if there was no Bureau at all,” Pillard said, adding that only Congress has the authority to repeal the law that created the CFPB.
Established in the aftermath of the global financial crisis in 2008, the CFPB oversees a range of consumer issues in the United States, including credit cards, debt collection, and mortgages.
Russell Vought was appointed CFPB director by Trump in February. The conservative plan known as Project 2025, which advocated for the agency’s dissolution, was largely conceived by Vought, who now serves as the head of the White House Office of Management and Budget.
On Friday, Attorney General Pam Bondi cheered the appeals court ruling as clearing the way for the CFPB “to right-size itself in accordance with the law to best serve the American people.”
The National Treasury Employees Union, which represents CFPB staff, decried the ruling.
“This decision could lead to widescale firings, which would result in the cessation of the Bureau’s important work protecting consumers,” said NTEU president Doreen Greenwald, adding that the CFPB has returned more than $21 billion to consumers since its establishment in 2011.
The union can appeal Friday’s decision to the full appeals court.
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