Federal appeals court allows CFPB dismantling to proceed
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A federal appeals court on Friday lifted an injunction that had blocked the dismantling of the Consumer Finance Protection Bureau.
Why it matters: It's a boost for the White House in their effort to radically shrink the agency, which is tasked with protecting consumers from being ripped off by big businesses.
- Conservatives, including the acting commissioner of the agency, Russ Vought, have long sought to abolish it, arguing that it encroaches on businesses.
Zoom in: In a 2-1 ruling, a three-judge panel of the U.S. Court of Appeals for the D.C. Circuit lifted a preliminary injunction put in place by a lower court that had paused mass firings at the agency.
- Plaintiffs had argued those firings would effectively prevent the CFPB from operating.
- In their Thursday decision, the two Trump-appointed judges ruled that neither they nor the lower court have jurisdiction to issue the injunction.
Between the lines: The decision doesn't mean that the White House can immediately start firing people.
- Under the court's rules, a plaintiff has 45 days to ask for a case to be re-heard by the entire appeals court; if the ask for a rehearing is granted, there's often more time granted before a ruling goes into effect.
The big picture: The case is part of a massive legal effort to push back on the White House's cutting of federal agencies; that opposition has been struggling after some initial success in the lower courts.
- Last month, in an unsigned order, the Supreme Court cleared the way for the Trump administration to fire workers across several agencies.
What they're saying: "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," Judge Nina Pillard, an Obama appointee, wrote in a dissent that is longer than the majority opinion.
- Lawyers for the plaintiffs, including unions that represent government workers, blasted the decision.
- "Without the full force of the Consumer Financial Protection Bureau—an agency Congress created specifically to protect consumers—millions will lose critical safeguards against predatory financial practices," said Jennifer Bennett, an attorney at Gupta Wessler LLP, who led the case against the White House.
- "If this decision is allowed to stand, it will shift the balance of power toward corporations at the expense of American families' financial security."
The other side: "We are pleased that the DC Circuit Court affirmed the President's constitutional authority to shrink this weaponized federal agency and slash the regulations they've used to smother the American people," a CFPB spokesperson told Axios by email.
- "We look forward to more victories in court on behalf of the President's agenda."
Editor's note: This story has been updated to add CFPB reaction.
