(Reuters) -A U.S. appeals court on Monday reinstated a temporary ban on mass firings at the Consumer Financial Protection Bureau, allowing workers to keep their jobs for now despite the Trump administration’s plan to shrink the agency’s workforce by 90%.
The split decision by the three-judge panel of Washington’s federal appeals court marked a setback for President Donald Trump’s efforts to reshape the CFPB into a fundamentally different organization staffed by as few as 200 people.
The CFPB and the White House did not immediately respond to requests for comment.
Congress created the CFPB in the wake of the 2008 financial crisis to protect the public from predatory practices in the financial services industry. Trump has accused the agency of politicized enforcement.
Since Trump took control of the CFPB in early February, the administration has attempted wholesale firings of CFPB workers, with Trump and his billionaire adviser Elon Musk both calling for the agency’s elimination. The administration now says the agency will continue to exist, albeit in much smaller form.
After a trial court last month temporarily blocked the administration from mass firings, the appeals court modified that order to allow the CFPB to conduct so-called reductions in force after a “particularized assessment” showing that any dismissed workers were not necessary for the agency to perform functions required by law.
After the CFPB this month moved to fire nearly 1,500 workers, reducing some agency offices and units to only one employee or none at all, a lower court again blocked the move and the agency again appealed.
Top CFPB officials say they have determined the agency only needs about 200 workers to meet its obligations under the law — which include supervising banks and nonbanks, enforcing consumer financial law and educating consumers — and this decision belongs to the administration, not the courts.
But in sworn statements the agency workers have said the firings would break the agency, rendering it incapable of functioning.
In their decision on Monday, Judges Cornelia Pillard and Gregory Katsas said it was best to restore the prohibition on mass firings while the battle plays out in court so that workers suing the government can still be protected if the Trump administration loses.
In a dissent, Judge Neomi Rao said Monday’s ruling “hamstrings the Executive and prevents the CFPB from downsizing until the merits of the appeal are resolved.”
Katsas and Rao were both appointed by Trump during his first term. Pillard was appointed by Democratic President Barack Obama.
(Reporting by Douglas Gillison; Editing by Leslie Adler)
