A federal appeals panel appeared sympathetic to issuing an administrative stay of a preliminary injunction, albeit with certain conditions to ensure that the Consumer Financial Protection Bureau fulfills congressionally mandated functions.
On Wednesday, a
The judges appeared to be leaning toward remanding the case back to the district court with some conditions that would allow the administration to fire some employees or put them on administrative leave.
"The government absolutely is not shutting down the bureau," said Eric D. McArthur, deputy assistant attorney general at the Justice Department. McArthur claimed repeatedly that acting CFPB Director Russell Vought is not trying to eliminate the agency, which requires congressional approval. He repeated several times that President Trump has a major policy initiative to significantly streamline and reform the federal workforce and the preliminary injunction was impinging on the executive branch.
Vought, a key architect of Project 2025, the conservative policy blueprint for overhauling the federal government,
The CFPB has become a crucial test of the limits of President Donald Trump's power to dismantle government agencies. A key issue in the litigation has been Vought's stop-work order, issued almost immediately after he was named acting CFPB director. The government's star witness, Adam Martinez, the CFPB's chief operating officer, testified during hearings before the district court that Vought had planned a reduction in force, which the government had denied.
Judge Gregory G. Katsas, a Trump appointee, said the district court had "a legitimate concern" that the Trump administration was shutting down the CFPB, and asked how many employees were necessary to do the agency's work.
"Here's where I'm struggling a little bit, which is, you laid off something like 200 [employees] and want to RIF 1,200," Katsas said. "That leaves 300. How do I know whether 300 employees can meet the statutory obligations, and how do we police that?"
Jennifer Bennett, a principal at the law firm Gupta Wessler LLP, which represents the CFPB's union, said that that Martinez had told the district court of the that "the agency was using RIFs to shut down" the CFPB.
"It was doing it in stages, so it was not laying off everybody in one fell swoop, it was laying off probationary employees, then term employees and then 1,200 employees and then the rest," she said.
As Bennett was explaining why the preliminary injunction should be continued, Judge Naomi Rao, a Trump appointee, noted that the litigation would drag on for some time.
"It would be usually two years into a president's term before he could direct how an agency should function and at what level," Rao said.
The DOH has asked the panel to stay several parts of a
The judges questioned how the court could tailor the injunction given that the CFPB is mandated to enforce 18 specific federal consumer financial laws including the Truth in Lending Act, the Fair Credit Reporting Act and the Consumer Financial Protection Act itself.
"I have a question that gets to the elephant in the room, which is the missing definition of statutory functions," said Judge Cornelia Pillard, who was appointed by President Obama.
"It is your understanding that if the government had no programs for enforcing any of these fundamental obligations … that would be up to the discretion of the agency?"
McArthur replied that "taking [the workforce] to zero, I think not likely, but trying to enforce any level of enforcement activity, supervision activity, that is absolutely off the list for the court."
"The district court does not have a roving mandate to ensure that the CFPB is fulfilling all of its statutory obligations," he claimed.
After putting the CFPB's staff on administrative leave for two months, the bureau has
Several interesting points of contention emerged during the two-hour hearing.
Judge Pillard asked McArthur if the government was now "disavowing" that President Trump had
"We absolutely are disavowing that that is the plan," McArthur said. "I just want one qualification on the characterization of the president's statement. He said that was his goal colloquially with the press, and that's a goal that he is perfectly entitled to have and to express to the American people with Congress. He never said that was a goal that he was going to try to achieve without legislation."
At another point in the hearing, McArthur said he was specifically authorized by Vought to tell the court that "the bureau will remain open and perform its legally required functions."
Judge Katsas asked: "Are you authorized by the president? I've been in your seat. I know the issue about getting clearance. Are you authorized to state, on behalf of the entire executive branch, as an officer of the court, that the agency will remain running?"
To which McArthur replied: "I have not obtained authorization from the president on this issue."
