CFPB Firings on Hold As Legal Battle Continues

Last week, the U.S. Court of Appeals for the D.C. Circuit reinstated a district court order blocking the agency’s planned reductions in force while also blocking the Trump administration from trying to shift funding away from the CFPB.

The underlying lawsuit was brought by the CFPB’s trade union and challenged the legality of the proposed reduction in force that would have cut almost 90 percent of agency staff, according to Consumer Finance and Fintech Blog. The unions alleged that cuts of that size, or even the dismantling of the CFPB altogether, could result in severe consequences for American consumers.

The court decision reversed a partial stay that permitted limited firings based on a “particularized assessment,” where each CFPB division would determine if it can fulfill its statutory duties without the staff members selected for termination. Since both sides remain divided over whether the assessments can be reviewed in court, the judges concluded that restoring the injunction was best.

Emails disclosed in the lawsuit showed that the Bureau’s leadership discussed a number of 485 remaining workers as late as April 15, Bloomberg Law reported. Two days later, the Bureau sent layoff notices to “as many as 1,483 of the agency’s staff members, which would have left just over 200 employees remaining.”

Though the court has yet to come to a decision, the order shows that a downsized CFPB could significantly curtail federal consumer financial enforcement. The case is set to move to oral argument on May 16.