A federal judge has stepped in again to stop President Trump’s administration from firing more than 80% of Consumer Financial Protection Bureau (CFPB) employees after the agency announced a drastic reduction to its mission and scope of work.
Earlier this week, the bureau rescinded all existing enforcement and supervision priority documents to concentrate resources on “pressing threats to consumers,” especially servicemembers, veterans and their families, according to a memo sent to CFPB staff on April 16 from Mark Paoletta, CFPB’s chief legal officer.
Mortgages will now get the highest enforcement priority, according to the memo. The CFPB is deprioritizing its enforcement of consumer data, student lending, medical debt, personal loans and digital payments, among other items, Paoletta wrote.
A day later, the agency sent pink slips to roughly 1,400 employees — or more than 80% of the CFPB’s workforce—through a massive reduction in force, leaving just 200 employees behind to carry out the bureau’s work, according to news reports and court documents.
On Friday, U.S. District Judge Amy Berman Jackson temporarily halted the mass firings, which she said violated her earlier preliminary injunction in March. In that ruling, Jackson ordered the Trump administration to pause CFPB layoffs for non-performance reasons and invalidated an agencywide stop-work order.
However, an appeals court partially stayed that ruling last week, opening the door for the administration to fire CFPB employees if they’re not needed to carry out the agency’s legal duties.
Jackson didn’t hold back in her sharp assessment of the administration’s latest actions to gut the watchdog agency.
“While the Chief Legal Counsel has intoned the phrase ‘particularized assessment,’” Jackson wrote in her ruling, “there is reason to believe that the defendants simply spent the days immediately following the Circuit’s relaxation of the Order dressing their RIF in new clothes, and that they are thumbing their nose at both this Court and the Court of Appeals.”
Jackson wrote that she’s concerned that the rushed nature of the firings and lack of consultation with agency heads will result in “a RIF that will decimate the agency and render it unable to comply with its statutory duties ,” according to her latest order.
The CFPB was formed after the 2008 financial crisis to ensure that banks and financial institutions follow consumer protection laws. The bureau is shifting its supervision back onto the big banks and depository institutions it was initially mandated to oversee, Paoletta noted in the memo.
In 2012, 70% of the bureau’s work focused on large banks and 30% on nonbanks, Paoletta wrote. Today, those numbers have “flipped,” he said, with more than 60% of CFPB’s supervision focused on nonbanks and less than 40% on banks and depository institutions.
The National Treasury Employees Union (NTEU) represents Treasury employees (including those who work at the CFPB) and swiftly sued the Trump administration in February after its stop-work order and initial terminations of probationary employees. However, this latest RIF goes much further.
NTEU President Doreen Greenwald praised Jackson’s latest order, vowing to continue the union’s legal fight against the Trump administration’s “abrupt and chaotic RIF process.”
“Cutting over 80 percent of CFPB staff is not only unwise, it’s a direct attack on the financial security of millions of Americans,” Greenwald said in a statement Friday. “We will continue to advocate on behalf of the American people and NTEU members in court in response to President Trump’s war on civil servants and we aim to demonstrate that these frenzied, thoughtless attempts to shutter agencies that have done nothing but faithfully serve the American people are a detriment to the public good.”
In a separate statement, the NTEU noted that CFPB workers have returned $20 billion in relief to nearly 200 million Americans “thanks to an institution created during one of the most dramatic recessions we’ve experienced in recent memory.”
Jackson set an April 28 hearing to determine whether the Trump administration’s latest RIF attempt violates the earlier injunction. This puts the government’s plans to carry out the mass firings at the CFPB on ice—for now.