The Trump administration has received the green light from the U.S. Court of Appeals for the District of Columbia Circuit to move forward with sweeping layoffs at the Consumer Financial Protection Bureau (CFPB), a decision that could reshape the agency’s future and the landscape of consumer protection in America. On August 15, 2025, the court lifted a preliminary injunction that had, since February, barred the administration from carrying out its plan to cut roughly 80-90% of the CFPB’s workforce, reducing its staff from nearly 1,700 employees to just over 200.
The ruling, delivered in a 2-1 decision, overturned an earlier lower court order that blocked the layoffs. According to Federal News Network and Government Executive, the majority opinion was authored by Circuit Judges Gregory Katsas and Neomi Rao, both appointed by former President Donald Trump. Judge Cornelia (Nina) Pillard, an Obama appointee, penned a strong dissent, warning that the move could amount to the effective dismantling of a congressionally created agency.
The CFPB, established in 2010 as part of the Dodd-Frank Act in the aftermath of the financial crisis, has long been a lightning rod in Washington. Over its 15-year existence, the agency claims to have returned approximately $21 billion to more than 200 million consumers, including working-class families, servicemembers, veterans, and students, who have been harmed by predatory financial institutions. Its mission, as originally defined by Congress, was to serve as a watchdog over banks, lenders, and other financial players, ensuring consumers are treated fairly and transparently.
But the agency’s future was thrown into turmoil earlier this year when Acting CFPB Director Russell Vought, installed by the Trump administration, initiated a reduction-in-force (RIF) plan that would eliminate approximately 1,500 positions. The National Treasury Employees Union (NTEU), representing more than 1,000 CFPB employees, along with several other plaintiffs, filed suit in February, arguing that the mass layoffs violated the separation of powers and amounted to the willful destruction of the agency.
According to court documents cited by Federal News Network and Government Executive, the process of determining which employees would be let go was chaotic and heavily influenced by the Department of Government Efficiency, a temporary organization formerly led by billionaire Elon Musk. In an internal email revealed during litigation, a CFPB executive expressed grave concerns: "I don’t think we can keep operating even for 60 days without keeping many of these folks." Despite such warnings, all but 207 employees received pink slips after Vought took control.
Throughout the legal battle, the CFPB’s staff remained on the payroll, but most investigations and enforcement actions ground to a halt. President Trump’s "One Big Beautiful Bill" had already slashed the agency’s budget nearly in half, and further legislative adjustments reduced its funding cap from 12% to 6.5% of the Federal Reserve System’s 2009 operating expenses, adjusted for inflation. These measures, according to Federal News Network, were projected to save billions by rescinding unobligated funds from the Inflation Reduction Act and eliminating unused money from the Securities and Exchange Commission’s technology modernization fund.
The appeals court majority, however, found that the plaintiffs lacked a legal basis to challenge what they described as an overarching decision to shut down the Bureau. In the majority opinion, Judge Katsas wrote, "To remedy that asserted decision, [plaintiffs] seek pervasive judicial control over the day-to-day management of the agency, including decisions about how many employees the agency may terminate, how many contracts it may cancel, how it may approve work, which buildings it must occupy, and how employees will complete remote work." He continued, "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, who previously led the Office of Information and Regulatory Affairs in Trump’s first term, concurred, emphasizing the executive branch’s discretion in managing federal agencies. The majority opinion concluded that the court was not authorized to review the day-to-day management decisions of the executive branch, including agency staffing levels, unless Congress explicitly provided such oversight.
Judge Pillard’s dissent offered a starkly different perspective. She wrote, "My colleagues nonetheless vacate the preliminary injunction because they deem the decision to unilaterally abolish the CFPB not a type of agency action we are authorized to review. That constricted view of our statutory and equitable power contravenes statutes, precedent, and basic principles of our constitutional government." Pillard further argued, "Congress created the CFPB, assigned it important missions and powers, and subjected its decisions to the strong presumption of judicial review that applies as a matter of course to the final actions of federal agencies. It is untenable to hold that same Congress meant the agency’s continued existence to be a matter of unilateral and unexplained presidential edict."
She concluded, "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. I respectfully dissent from the decision vacating the district court’s amply supported preliminary injunction."
The ruling has sparked fierce debate in legal and political circles. Supporters of the Trump administration’s move argue that the executive branch must have leeway to manage federal agencies efficiently, especially in times of fiscal constraint. They contend that shrinking the CFPB is a step toward reducing government overreach and curbing unnecessary spending. "It’s about restoring balance and ensuring accountability," said one administration official, echoing the majority’s reasoning.
Critics, however, warn that the decision sets a dangerous precedent. By allowing the executive branch to gut a congressionally mandated agency, they argue, the court has undermined the checks and balances that are fundamental to the U.S. system of government. The NTEU and its allies have vowed to continue the fight, both in court and in Congress, to preserve the CFPB’s mission and protect its employees.
As for the agency itself, the future looks uncertain. With layoffs now permitted to proceed, the CFPB faces the daunting challenge of carrying out its legally required activities with a fraction of its former staff. The agency’s ability to investigate financial wrongdoing, enforce consumer protection laws, and return funds to harmed consumers may be severely limited in the months ahead.
For millions of Americans who have benefited from the CFPB’s work over the past decade and a half, the stakes couldn’t be higher. Whether the agency can continue to serve as a bulwark against predatory practices—or whether it will be reduced to a shadow of its former self—now rests in the hands of its drastically diminished workforce, the courts, and, ultimately, Congress.
