A federal judge ordered the Trump administration to fund the Consumer Financial Protection Bureau after it argued that it was legally barred from funding the agency.
The administration and Office of Management and Budget Director Russell Vought wanted to shutter the CFPB for good and conduct mass firings in February, but the courts had stalled their efforts. A court order currently bars the administration from closing the CFPB.
The CFPB had been defunded by the administration and was set to run out of money early next year. U.S. District Judge Amy Berman Jackson’s ruling criticized the administration for going around her original order to refrain from closing the CFPB.
She stated that “the defendants are unabashedly trying to shut the agency down again, through different means.”
“It appears that defendants’ new understanding of ‘combined earnings’ is an unsupported and transparent attempt to achieve the very end the court’s injunction was put in place to prevent,” Jackson wrote, adding that the administration’s “unilateral decision” to deny funding would be in violation of her order.
The administration argued that it cannot fund the agency because the Federal Reserve is losing money and is unable to seek more funding under the agency’s governing statute. Jackson discounted the explanation as a legally baseless pretext.
Opponents of the CFPB’s dismantling argue that closing it will weaken consumer protection, leaving people vulnerable to scams, predatory lending practices, and faulty products. The Democratic attorneys general for 21 states and the District of Columbia sued Vought, acting director of the CFPB, to keep the agency funded earlier this month.
California Attorney General Rob Bonta, a plaintiff in the lawsuit, said that “hundreds of thousands of consumer complaints will fall on deaf ears” if the bureau is closed.
“By refusing to fund the CFPB, even when legal and appropriate funding mechanisms are available, the Trump administration has sharpened its message that it does not care about affordability, that it does not care to be on the side of families and working Americans,” he added.
The Trump administration has suggested the CFPB is a burden on American free enterprise.
DEMOCRATIC ATTORNEYS GENERAL FILE LAWSUIT AGAINST VOUGHT TO KEEP CFPB FUNDED
Sen. Elizabeth Warren (D-MA), who proposed the creation of the CFPB in 2007 as a Harvard professor, praised the court ruling Tuesday.
“A federal court rejected the Trump administration’s most recent, ridiculous attempt to starve the Consumer Financial Protection Bureau of funding,” Warren said in a statement. “If courts continue to uphold the law, they’ll keep blocking Russ Vought’s illegal attempts to ‘close down’ the agency that has returned $21 billion directly to Americans who were cheated by big banks and giant corporations.”