A federal judge has ruled that the current administration must maintain funding for the Consumer Financial Protection Bureau (CFPB), rejecting an effort to financially cripple the agency. The decision prevents the immediate closure of the watchdog, which is tasked with safeguarding Americans from predatory financial practices.
The ruling, issued by U.S. District Judge Amy Berman Jackson, addresses a recent move by the agency’s acting leadership to cut off its funding stream. Officials had argued that the Federal Reserve, which finances the CFPB, could no longer provide the necessary funds due to its own operational losses. Judge Jackson dismissed this rationale, stating the justification was “manufactured” and not a lawful basis for ignoring a prior court order.
The legal conflict stems from a lawsuit filed by the union representing CFPB employees. An earlier injunction from Judge Jackson had already barred the administration from dismantling the agency or conducting mass layoffs. In her latest order, she emphasized that funding has flowed without interruption since the bureau’s creation over a decade ago, including periods when the Federal Reserve’s expenses surpassed its income.
The judge characterized the funding cutoff as a transparent maneuver to bypass the judicial process. “The only new circumstance,” she wrote, “is the administration’s determination to eliminate an agency created by Congress with the stroke of a pen,” while the broader legal challenge is still pending before an appeals court.
The timing of the order was critical, arriving just days before the CFPB was projected to exhaust the funds needed to pay its staff. The decision was hailed by prominent lawmakers who support the agency’s mission, citing its record of recovering billions of dollars for consumers harmed by corporate misconduct.
The administration has not yet commented on the ruling. The case concerning the broader attempt to abolish the consumer bureau is scheduled for review by a federal appeals court early next year.