On August 15, 2025, the U.S. Court of Appeals for the District of Columbia Circuit delivered a seismic ruling that could reshape the future of federal consumer protection in the United States. In a 2-1 decision, the court lifted an injunction that had, since February, prevented the Trump administration from proceeding with sweeping layoffs at the Consumer Financial Protection Bureau (CFPB). With the legal roadblocks now cleared, the CFPB is poised to slash its workforce by about 80-90%, reducing its staff from around 1,700 to just 200 employees, as reported by multiple outlets including NPR, American Banker, and Government Executive.
The ruling is the latest turn in a bitter legal and political struggle over the fate of an agency created in the wake of the 2008 financial crisis. The CFPB was established under the Dodd-Frank Act as an independent watchdog, funded by the Federal Reserve, and tasked with protecting consumers from unfair, deceptive, or abusive financial practices. In its 14-year history, the bureau claims to have returned over $21 billion to consumers. Yet, it has been a consistent target of deregulation advocates, Wall Street, and, more recently, the Trump administration, who argue the agency overreaches its mandate and stifles economic growth.
The Trump administration’s plan, spearheaded by Acting CFPB Director Russ Vought, involves a drastic reduction-in-force (RIF) that would see more than 1,400 employees laid off. As American Banker detailed, the move was challenged in court by the National Treasury Employees Union (NTEU), which represents CFPB workers. The union argued that the executive branch cannot unilaterally dismantle an agency created by Congress, and that such mass layoffs would cripple the bureau’s ability to perform its legally mandated functions.
In its majority opinion, the appellate court—led by Judges Gregory Katsas and Neomi Rao, both Trump appointees—ruled that the lower court lacked jurisdiction to block the layoffs on the basis of employment loss. Instead, they said that individual employment disputes must be handled through specialized federal channels such as the Merit Systems Protection Board or the Federal Labor Relations Authority. For those concerned about the agency’s ability to provide required services, the court suggested that lawsuits could be brought under the Administrative Procedure Act, but only if plaintiffs could demonstrate that a specific service had been unlawfully withheld or unreasonably delayed.
Judge Katsas wrote for the majority: "Such challenges would target specific agency action or inaction that is alleged to be unlawful and to harm specific individual plaintiffs." Judge Rao concurred, emphasizing that the courts are not equipped to decide how many employees the CFPB needs to fulfill its statutory duties. In their view, the judiciary should not micromanage the day-to-day operations of an executive agency.
But the ruling was not unanimous. Judge Cornelia Pillard, an Obama appointee, issued a forceful dissent. "It will be cold comfort to plaintiffs if they ultimately succeed on the merits in their challenge to the CFPB’s shutdown only to discover that defendants have put the agency in a hole from which it can never fully recover," she wrote, warning that the destruction of the agency’s institutional knowledge, data, and relationships could make any future rebuilding effort a years-long ordeal. Pillard further cautioned that the majority’s reasoning could allow presidents to evade judicial scrutiny simply by keeping plans secret until they are irreversible, a scenario she argued is incompatible with constitutional checks and balances.
The immediate effect of the court’s decision is to allow the Trump administration to proceed with its RIF, though implementation is delayed for at least seven days to allow for any motions for rehearing. The NTEU has seven days to petition for a rehearing, which, if granted, could put the layoffs on hold for weeks or even months, according to American Banker. An appeal to the full D.C. Circuit or even the U.S. Supreme Court remains possible, as noted by NPR.
Reactions to the ruling have been swift and polarized. Doreen Greenwald, NTEU’s national president, condemned the decision, stating, "Today, the U.S. Court of Appeals for the D.C. Circuit inexplicably paved the way for a wide-scale reduction in force and dismantling of operations at the Consumer Financial Protection Bureau. NTEU is committed to continuing the fight for the CFPB employees and their work on behalf of the American people." CFPB union president Cat Farman called the ruling "a disgrace," arguing, "It empowers Donald Trump to unilaterally eliminate vital public services established by Congress. None of us can stand idly by while Russ Vought and Donald Trump destroy the agency that protects working Americans from financial predators."
Senator Elizabeth Warren, the architect of the CFPB, also decried the court’s decision: "Today’s divided panel decision willfully ignores the Trump Administration’s unprecedented and lawless attempt to destroy an agency created by Congress that has helped millions of families across the country." Mike Pierce, a former deputy assistant director of the CFPB and now executive director of the Student Borrower Protection Center, echoed these concerns, warning, "The CFPB is the last line of defense for working families and honest businesses against the relentless wave of fraud and abuse by Wall Street and Big Tech. Should Trump and Vought succeed in destroying the CFPB, Americans will have no one to look out for them as Trump’s economy craters."
On the other side, administration officials and supporters argue that the cuts are necessary to make the bureau more efficient and focused. U.S. Attorney General Pamela Bondi posted on social media, "The CFPB is now free to right-size itself in accordance with the law to best serve the American people." Mark Paoletta, the CFPB’s chief legal counsel, wrote to staff in April that a smaller agency would "focus on tangible harms to consumers" and shift resources away from enforcement and supervision that could be handled by states. The new priorities include a greater focus on banks and mortgage fraud, while deprioritizing medical debt, student loans, peer-to-peer lending, and digital payments.
In the months leading up to the ruling, the CFPB had already begun shutting down its headquarters, cancelling contracts, terminating its lease, and firing probationary and term employees—including its student loan ombudsman. The agency’s budget has also been slashed nearly in half by the recently enacted One Big Beautiful Bill Act, further limiting its operational capacity.
The legal saga is far from over, with the possibility of further appeals and a looming question over whether the CFPB can continue to fulfill its Congressionally-mandated mission with only a fraction of its former staff. For now, the fate of the nation’s consumer watchdog hangs in the balance, caught between competing visions of government oversight and executive authority.
As the dust settles, Americans are left to wonder: Who will protect consumers if the watchdog’s teeth have been pulled?