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Court Ruling Opens Door to Restructuring of CFPB PDF Print E-mail

August 20, 2025 - A federal appeals court has ruled that the Trump administration may proceed with plans to significantly scale back the Consumer Financial Protection Bureau (CFPB), lifting an earlier order that had blocked mass layoffs and structural changes at the agency.

 

The 2–1 decision, issued August 15 by the D.C. Circuit Court of Appeals, said that a lawsuit brought by CFPB employees and the NAACP was too broad to move forward. The judges found that while individual layoffs could still be challenged in court, the claim that the administration planned to shut down the agency entirely was not one the courts could review at this stage. Judge Gregory Katsas, writing for the majority, said the plaintiffs had not shown a final decision had been made to close the bureau. Judge Cornelia Pillard dissented, arguing that the courts should retain authority to block efforts to eliminate a federal agency.

 
The ruling overturns an injunction from U.S. District Judge Amy Berman Jackson, who earlier this year had temporarily blocked layoffs after finding that the agency risked being unable to meet its legal responsibilities. With that injunction lifted, the administration can move forward with staff reductions and other changes, though the case may still be appealed to the full D.C. Circuit or the Supreme Court.
 
The CFPB was created in 2010 following the financial crisis to oversee consumer financial products and services such as mortgages, credit cards, and payday loans. Since its creation, the agency has taken enforcement actions that returned billions of dollars to consumers and issued rules aimed at curbing deceptive or abusive practices. Supporters view the bureau as a key consumer safeguard, while critics have argued it imposes unnecessary regulatory burdens on businesses.
 
In recent years, the agency’s budget has been reduced, and several enforcement cases and settlements have been scaled back. The administration has also directed the CFPB to review financial data-sharing rules and investigate concerns raised about bank account closures.
 
For consumers, the changes could mean fewer regulatory actions targeting practices such as hidden fees or predatory lending. For businesses, particularly financial institutions, the shift may reduce compliance costs and limit oversight. The long-term effect will depend on how far the restructuring goes and how the courts rule on further appeals.
 
     
 

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