With an injunction preserving the operations and workforce of the Consumer Financial Protection Bureau, a federal judge is directing the Trump administration to keep the lights on there at least for now.
Judge Amy Berman Jackson of the U.S. District Court for the District of Columbia stated in a Friday ruling announcing her preliminary injunction, “The Court cannot look away or the CFPB will be dissolved and dismantled completely in approximately 30 days.”
According to court records and a consumer expert, the decision means the regulator has to make sure its database stays operational and that its hotline for consumer complaints is kept running.
Jackson’s decision calls for a flurry of rehires, including a top point person assigned to assist students with debt. The decision coincides with the Trump administration’s intention to close the U.S. Education Department.
It also coincides with a period when consumer health as a whole is being affected by Americans’ debt load and excessive costs.
Erin Witte, director of consumer protection at Consumer Federation of America, said for consumers this means CFPB staff members can return to doing what they do best, which is combating fraud.
Early on in the Trump presidency, officials stopped working and relocated employees of an agency long causing Republican discontent to be fired. Longstanding complaints from Republicans and the financial sector claim that the government overreached itself in applying its policies and launching cases.
An affidavit from an alleged CFPB employee states that the Trump administration’s expectation was the CFPB would become a “room at Treasury, [the] White House or Federal Reserve with five men and a phone in it.”
Consumer advocacy organizations and federal-workers unions sued to halt the planned effective closure.
Jackson’s 112-page ruling is another court critique of the Trump government’s intentions to rapidly reduce the federal workforce. In two separate cases, both of which are under appeal, judges have directed the reinstatement of thousands of probationary employees.
The ruling explicitly emphasizes that it does not ensure the long-term existence of the CFPB. Jackson said President Donald Trump is entitled to advocate laws transforming the agency anyway he likes.
“It will thus be up to Congress to weigh the advantages of any specific proposal aimed at streamlining the agency against the benefits of sustaining the CFPB, which has been fulfilling its mission to return billions of dollars back consumers at no cost to the taxpayers since 2010,” the judge said.
Doreen Greenwald, national president of the National Treasury Employees Union, one of the plaintiffs, said “Knowing CFPB is safe for now, we look forward to making our case that the administration is oversteering its authority and violating the separation of powers by attempting to weaken or eliminate the Bureau.”
Greenwald continued, ” Congress passed the law that created CFPB as an independent watchdog with a mission of protecting Americans from fraud and abuse in the financial-services industry, and the executive branch cannot simply close its doors.”
CFPB lawyers under the Trump administration abandoned lawsuits against big financial firms including Capital One (COF), Rocket Homes (RKT), Zelle and leading banks.
Experts told MarketWatch before that Americans must be more proactive in asking questions and safeguarding their own money to save their wallets in the face of a reduced CFPB.
The White House did not reply right away to a comment request.
