Full DC Circuit grills Trump on CFPB shutdown attempt

The CFPB was created by the Dodd-Frank Act in 2010 to protect consumers from predatory financial products after the 2008 financial crisis. Congress specifically designed it to be funded through the Federal Reserve rather than congressional appropriations, so it would be harder to defund through budget fights.

Acting CFPB Director RVRussell Vought — who simultaneously serves as Trump's OMB director — issued a stop-work order in early 2025 and moved to fire up to 1,400 of the bureau's roughly 1,700 employees. Federal District Judge ABAmy Berman Jackson blocked the mass firings and ordered the bureau to keep operating.

A three-judge 🏛️DC Circuit panel initially sided with the administration 2-1 in August 2025, lifting the injunction. The full court granted en banc review in December 2025 — a rare step signaling the court believed the panel may have gotten it wrong — and reinstated the injunction while it reconsidered the case.

At the Feb. 24 hearing, the administration's lawyer acknowledged the executive branch can't legally shut the CFPB down entirely because Congress mandated its existence. But he argued federal courts have no jurisdiction to stop individual firings, which workers must challenge through the Merit Systems Protection Board instead.

NTEU lawyer JBJennifer Bennett countered that this case is bigger than any individual firing. She said the core claim is that the Trump administration is trying to shut down an agency without statutory authority — a question courts can and must decide. Several judges appeared to agree, pressing the government on what oversight would remain if courts had no role.

The administration also tried a financial angle: a DOJ legal memo argued the Federal Reserve has no profits to transfer to the CFPB since the Fed has operated at a net loss since 2022, meaning the bureau would run out of money in early 2026. Judge Jackson rejected that argument in December, ruling that any funding shortage would be the administration's own deliberate creation.

A final ruling from the full 🏛️DC Circuit isn't expected until later in 2026 or early 2027. Legal observers expect the case will reach the Supreme Court. If the administration prevails, it would establish that a president can effectively zero out any congressionally created agency by refusing to staff or fund it.