Court Ruling Highlights Tensions Over Consumer Financial Protection Bureau (CFPB) Firings

In a recent update on the ongoing litigation surrounding the Consumer Financial Protection Bureau (CFPB), authors John L. Culhane, Jr. and Richard J. Andreano, Jr. of Ballard Spahr, LLP report that the US Court of Appeals for the District of Columbia denied the Trump Administration’s request to delay its response to an en banc hearing request. 

The case stems from the National Treasury Employees Union’s (NTEU) challenge to the Administration’s plan to terminate over 1,400 CFPB employees during a government shutdown. Despite the NTEU not opposing the delay, the court ordered the Administration to respond by October 21, 2024.

Justice Department attorneys had argued that, due to a lapse in appropriations, they were legally barred from working on most cases during the shutdown. However, the appeals court maintained the filing deadline. The dispute traces back to a prior ruling in which a divided appeals panel dissolved a lower court injunction blocking the mass terminations, effectively allowing the firings to proceed. The court, however, stayed its mandate pending the plaintiffs’ petition for an en banc rehearing, which has since been filed.

The plaintiffs contend that the Administration’s actions amount to an unlawful attempt to dismantle the Consumer Financial Protection Bureau. While officials have denied that intent, several press reports have cited comments by Acting CFPB Director Russell Vought suggesting otherwise, though these statements have not been independently verified.

For risk professionals, the case underscores how political and budgetary pressures can disrupt agency stability, with legal uncertainties amplifying institutional and compliance risks within federal regulatory bodies.