The city of Baltimore is suing the Consumer Financial Protection Bureau and its acting director, Russell Vought, arguing that his recent decision not to use the bureau's statutory funding mechanism will leave it "dead in the water" and therefore limit the ability to protect consumers.
The lawsuit — one of dozens popping up against the second Trump administration — was filed Wednesday by Democracy Forward, on behalf of Baltimore's mayor and city council and the Economic Action Maryland Fund, a nonprofit group that promotes economic justice and financial inclusion.
The city and the nonprofit allege that Vought's decision to not draw down the bureau's quarterly funds is illegal. The suit was filed in the U.S. District Court for Maryland.
Vought's decision is also "arbitrary, capricious, an abuse of discretion or otherwise not in accordance with law because it is designed to and in fact will leave the CFPB with insufficient funding to carry out its statutorily required functions," the lawsuit said.
Both the city and the nonprofit "rely on the CFPB" for consumer-protection training, the tracking of consumer complaints and other services, and the plaintiffs "would be irreparably harmed" if the bureau is defunded, according to the suit.
The CFPB, regarded as
The bureau, which was launched in 2011 in the wake of the financial crisis, has no other source of funding. Earlier this week, President Donald Trump confirmed to reporters in the Oval Office that his goal is to
Since being named acting CFPB director in
The notification to the Fed is meant to "deprive the bureau of operating funds," the city and the nonprofit said in their lawsuit. Lacking sufficient operating funds, "the bureau will be unable to perform its statutorily mandated functions or continue its other work," the plaintiffs claimed.
The CFPB did not immediately respond Thursday to a request for comment. The bureau's public relations office has not responded to American Banker's media requests since Feb. 3, when Treasury Secretary Scott Bessant was named acting director following
Bessant took the first swing at the bureau, directing its staff to
Russell Vought, the Consumer Financial Protection Bureau's new acting director, ordered staff to stop all work and closed the agency's headquarters for a week.
McKernan, who
Baltimore, the largest city in Maryland, said in the lawsuit that it has active accounts with the CFPB's consumer complaint database, in order to track issues residents face in connection with unfair and deceptive practices and discriminatory lending. The city's residents are 60% Black, and many residents have historically experienced unfair lending and consumer practices, according to the lawsuit.
Meanwhile, the nonprofit group Economic Action said that it has used the bureau's education materials to educate older consumers about scams — and encourage them to file complaints with the CFPB.
Without the complaint database, "Economic Action's work would be significantly impaired, and it would be required to devote more resources and more counselors' time to achieve the same results for the people it serves," the lawsuit said.
"Resolving issues with banks and debt collectors, for example, is more difficult when only an individual consumer is involved and the private entity is not receiving the consumer's complaint from a government agency."
