The Consumer Financial Protection Bureau (CFPB), the government watchdog created to shield Americans from predatory financial practices, now stands at a dramatic crossroads. On August 15, 2025, a federal appeals court panel gave the Trump administration the green light to resume mass layoffs and further its aggressive restructuring of the agency, upending months of legal wrangling and uncertainty for thousands of federal workers. The decision, rendered by the U.S. Court of Appeals for the District of Columbia Circuit, came down in a 2-1 split, with Judges Gregory Katsas and Neomi Rao—both Trump appointees—forming the majority, and Judge Cornelia (Nina) Pillard, an Obama appointee, issuing a forceful dissent.
This ruling lifts an injunction that had, until now, kept the CFPB from carrying out plans to lay off at least 80 percent of its remaining workforce—more than 1,400 staffers—leaving the agency with just about 200 employees. The case, as reported by Nexstar Media and NPR, centers on whether employee unions and outside groups that rely on the CFPB’s services have the legal standing to challenge these layoffs in federal court. The panel’s majority said they do not.
Judge Katsas, writing for the majority, stated, “If the plaintiffs’ theory were viable, it would become the task of the judiciary, rather than the Executive Branch, to determine what resources an agency needs to perform its broad statutory functions.” Judge Rao concurred, reinforcing the court’s view that the matter lies outside the judiciary’s purview. Their opinion effectively hands the reins to the administration, allowing it to proceed with what it calls a “right-sizing” of the bureau.
But not everyone on the bench agreed. Judge Pillard’s dissent was pointed: “The notion that courts are powerless to prevent the President from abolishing the agencies of the federal government that he was elected to lead cannot be reconciled with either the constitutional separation of powers or our nation’s commitment to a government of laws.” She further argued, “It is untenable to hold that same Congress meant the agency’s continued existence to be a matter of unilateral and unexplained presidential edict.” According to NPR, Pillard warned that had the district court not intervened earlier, “there is very little reason to believe that the CFPB would have existed by the end of March.”
The CFPB’s origins trace back to the aftermath of the 2008 financial crisis. Congress created the agency as part of the bipartisan Dodd-Frank Act, granting it a broad mandate to oversee financial products, regulate banks and lenders, and operate a consumer complaint office. Funded by transfers from the Federal Reserve, the bureau was designed to be insulated from political interference. Yet, it has long been a target for critics—including some in Silicon Valley and on Wall Street—who view its regulatory reach as overbearing.
The Trump administration, via its Department of Government Efficiency, made the CFPB an early target for restructuring. Russell Vought, tapped as acting director, swiftly curtailed the bureau’s funding, issued stop work orders, canceled the lease on its headquarters, and began planning mass layoffs. As Nexstar Media notes, Vought’s actions were part of a broader effort to “dismantle the agency that was established following the 2008 financial crisis.”
Attorney General Pam Bondi celebrated the appeals court’s decision, posting on social media that “the CFPB is now free to right-size itself in accordance with the law to best serve the American people.” In an April memo to staff, CFPB chief legal counsel Mark Paoletta echoed this sentiment, arguing, “An approximately 200 person agency allows the Bureau to fulfill its statutory duties and better aligns with the new leadership’s priorities and management philosophy.” Paoletta detailed plans to shift agency resources away from enforcement and supervision that states could handle, focusing more on banks and mortgage fraud, while deprioritizing areas like medical debt, student loans, peer-to-peer lending, and digital payments.
Not surprisingly, consumer advocates and unions see things differently. The National Treasury Employees Union (NTEU), representing CFPB staff, contends that the administration is attempting to “dismantle the bureau unlawfully.” In a brief, union attorneys wrote, “The Executive Branch may not unilaterally abolish an agency created by Congress.” The union, joined by the CFPB Employee Association, the NAACP, the National Consumer Law Center, and the Virginia Poverty Law Center, sued to halt the layoffs. Among the plaintiffs was Eva Steege, a Lutheran pastor who, facing a terminal diagnosis, worried she could not resolve her student loan debt after the CFPB canceled her meeting with the agency’s student loan ombudsman. Steege died on March 15, 2025, her case a poignant symbol of the stakes for ordinary Americans.
Adina Rosenbaum, an attorney at Public Citizen and part of the plaintiffs’ legal team, told Nexstar Media they are “strongly considering” asking the full D.C. Circuit to review the ruling. “The Trump administration does not have the authority to abolish the Consumer Financial Protection Bureau, which was created by Congress and which plays an important role in protecting consumers across the country,” Rosenbaum said.
The legal saga has been marked by a tug-of-war between the courts and the administration. In March, U.S. District Judge Amy Berman Jackson had blocked the layoffs, ordered that fired employees be reinstated, and required that some canceled contracts be restored. Judge Jackson was skeptical that the administration’s reduction in force was sufficiently “particularized,” writing, “There is reason to believe that the defendants simply spent the days immediately following the Circuit’s relaxation of the Order dressing their RIF [reduction in force] in new clothes, and that they are thumbing their nose at both this Court and the Court of Appeals.”
Even with the injunction in place, the CFPB’s future has grown increasingly uncertain. The bureau has dropped a number of cases and deprioritized enforcement activities. Meanwhile, the One Big Beautiful Bill Act, passed in early July, slashed the CFPB’s budget nearly in half, though the agency retains the ability to request additional funds from Congress. The Supreme Court recently ruled that the Trump administration may continue mass firings of federal workers, but according to the NTEU, that decision does not directly affect the CFPB case.
With the appeals court’s latest ruling, the path is now clear for the Trump administration to continue its overhaul of the CFPB. The unions and advocacy groups, however, are not done fighting. An appeal to the full D.C. Circuit—and possibly the U.S. Supreme Court—remains on the table. For now, the fate of the nation’s top consumer watchdog agency, and the protections it offers to millions of Americans, hangs in the balance as legal and political battles rage on.
