Bloomberg News
A federal judge on Friday granted a preliminary injunction to the Consumer Financial Protection Bureau’s union, stating that the court “must act” to stop the Trump administration from dismantling the agency.
U.S. District Judge Amy Berman Jackson granted a preliminary injunction that maintains the agency’s existence until a lawsuit filed by the National Treasury Employees Union has been resolved on the merits. The injunction reinstates and preserves the agency’s contracts, work force, data, and operational capacity, and protects and facilitates the employees’ ability to perform statutorily required activities.
The 112-page order by Berman Jackson, of the U.S. District Court for the District of Columbia, is a yet another blow to the Trump administration’s efforts to dismantle federal agencies and fire employees. The administration faces more than 100 lawsuits over its ongoing efforts to radically reduce the federal workforce.
Berman Jackson said that her order is “sufficiently specific to be enforceable, while also broad enough to afford the agency and its leadership the discretion they are accorded under the statute when carrying out their regulatory, enforcement, and supervisory responsibilities.”
The CFPB’s acting Director Russell Vought fully engaged in “a hurried effort to dismantle and disable the agency entirely” by firing all probationary and term-limited employees without cause, cutting off funding, terminating contracts, closing all of the offices, and implementing a reduction in force that would cover the entire agency.
“These actions were taken in complete disregard for the decision Congress made 15 years ago, which was spurred by the devastating financial crisis of 2008 and embodied in the United States Code, that the agency must exist and that it must perform specific functions to protect the borrowing public.”
She wrote that the CFPB’s elimination was interrupted only because the National Treasury Employees Union sued Vought “and obtained the Court’s intervention on the day the overwhelming majority of the employees were going to be fired.”
“The defendants are still engaged in an effort to implement a Presidential plan to shut the agency down entirely and to do it fast,” she wrote. “Absent an injunction freezing the status quo — preserving the agency’s data, its operational capacity, and its workforce — there is a substantial risk that the defendants will complete the destruction of the agency completely in violation of law well before the Court can rule on the merits, and it will be impossible to rebuild.”
Berman Jackson said the court “cannot look away or the CFPB will be dissolved and dismantled completely in approximately thirty days, well before this lawsuit has come to its conclusion.”
At the top of the memorandum order, Berman Jackson listed three quotations from early February: Elon Musk’s Feb. 7 post on X stating “CFPB RIP”; Vought’s Feb. 8 post on X saying “the CFPB has been a woke and weaponized agency against disfavored industries and individuals for a long time. This must end”; and President Donald Trump’s remarks to a reporter: “That was a very important thing to get rid of.”
She said the motion for preliminary injunction “boils down to one question: should the Court take action to preserve the Consumer Financial Protection Bureau now, before the case concerning its fate has been resolved?”
While admitting that doing so would be “an extraordinary step,” Berman Jackson said the CFPB’s union is likely to succeed on their claims and would suffer irreparable harm if the court did not act.
“An injunction would be in the public interest,” she stated. “There is no act of Congress that empowers the President to shut down the CFPB [at] his discretion.”
The chronology of events since Vought took over the agency and court testimony suggest that the CFPB in the Trump administration engaged in “a charade for the Court’s benefit” by authorizing the resumption of some work and reactivating some contracts.
“The Court’s oversight is the only thing holding the defendants back. If the Court denies the motion for interim relief, the RIF notices that have already been prepared will go out before the ink is dry on the Court’s signature, the employees will be back on administrative leave for just thirty days before they are gone, and the defendants will pull the plug on the CFPB,” she wrote.
“This is precisely the sort of situation preliminary injunctions were designed to address,” she wrote. “If the defendants are not enjoined, they will eliminate the agency before the Court has the opportunity to decide whether the law permits them to do it, and as the defendants’ own witness warned, the harm will be irreparable.”
The National Treasury Employees Union filed a lawsuit Feb. 9 on behalf of hundreds of CFPB employees alleging that Vought intended to gut the agency through mass firings, usurping the role of Congress. NTEU was joined in the suit by the National Consumer Law Center, National Association for the Advancement of Colored People, Virginia Poverty Law Center, Rev. Eva Steege, and the CFPB Employee Association, challenging decisions made and actions taken to carry out President Trump’s vow to have the CFPB “totally eliminated.”
The lawsuit is among more than 100 lawsuits piling up against the second Trump administration, and the second one against the CFPB and Vought. The consumer advocacy group Democracy Forward filed a lawsuit on behalf of the city of Baltimore and the nonprofit group Economic Action Maryland Fund, arguing that Vought’s decision not to draw down the bureau’s quarterly funding was illegal. A Judge declined to issue an injunction in that case earlier this month.
Vought, who was named acting director on Feb. 7, moved immediately to overhaul the CFPB, which was created in 2011 to consolidate consumer financial laws that were previously fragmented across multiple regulators.
The CFPB is the only federal agency authorized to supervise the nation’s largest banks for compliance with consumer financial protection laws. It also supervises nonbanks of all sizes in certain markets including mortgage companies, payday lenders, larger nonbank participants, credit reporting agencies, digital payment apps and debt collectors.
Berman Jackson did not mince words in describing the actions of Vought and President Trump. She said that Vought’s actions to dismantle and shut down the CFPB are unconstitutional because they exceed the executive’s authority and usurp the legislature’s authority.
“Their argument is that Acting Director Vought’s actions to close the agency on behalf of the President violated both the separation of powers inherent in the Constitution and the statute that created the CPPB and assigned it mandatory duties,” she wrote.
The Justice Department, in defending Vought’s actions, tried to claim that a stop-work order did not constitute a final action by the agency and therefore could not be challenged under the Administrative Procedure Act. The APA governs the process by which federal agencies develop and issue regulations.
“There is no mystery about what is going on as the President … Elon Musk and Russell Vought have made their actions and intentions clear,” she wrote. “Indeed, only two days after the agency’s Legal Officer — who like the police chief in Casablanca who was ‘shocked, shocked’ to find gambling going on — professed to be surprised that some employees were not working, the White House posted a message on its ‘Work for You Again’ webpage boasting: ‘President Trump ordered the Consumer Financial Protection Bureau — the brainchild of Elizabeth Warren, which funneled cash to left-wing advocacy groups — to halt operations.'”
After Berman Jackson issued a consent order on Feb. 14, the CFPB’s efforts to dismantle the agency “continued as if nothing had changed,” she wrote.
Employees remained on administrative leave, and were not performing their work duties. The bureau’s home page was deleted at the request of Vought, and a reduction in force was still being planned. Moreover, on Feb. 19, in an interview with CBS News, President Trump said that his administration had “virtually shut down the out-of-control CFPB.”
Additional actions came at a rapid-fire pace, including moving the CFPB out of its headquarters in 30 days, cutting off travel cards and cancelling more contracts.
The judge made further references in the order to attempt by the leadership to intimidate employees and obfuscate on planned mass firings while claiming employees were performing legally-required functions.
“The evidence showed that emails purporting to get things up and running again could not be taken on face value, either, as the employees found out that being reactivated on paper did not mean they could actually do the work,” she wrote.
While the judge stopped short of calling the CFPB’s leaders liars, she noted that Adam Martinez, the bureau’s chief operating officer and a key witness in the case, “appeared anguished by both the demise of the agency and by his being cast in the role of agency spokesman.”
In court testimony, Berman Jackson wrote that Martinez “had the demeanor of an abused wife brought to court by her husband to drop the charges.”
She also said that “Martinez’s testimony established that he has no idea what the leadership of the agency is planning beyond firing all of the employees.”
The Justice Department claimed that an injunction wasn’t needed because CFPB employees had been instructed to perform mandated duties.
But Berman Jackson countered that Vought and the CFPB “overstepped their statutory and constitutional authority and usurped the power of the members of Congress, who were democratically elected by the people in every state in the union.”
