D.C. Circuit vacates lower court ruling that blocked mass firings at the CFPB.
Decision stayed pending rehearing petition, delaying dismissals for now.
Consumer advocates warn ruling threatens CFPB’s survival and consumer protections.
A federal appeals court has vacated a U.S. District Court decision that halted mass firings at the Consumer Financial Protection Bureau (CFPB), potentially opening the way for an eventual finding upholding the dismissals. In a 2-1 decision, a three-judge panel at the U.S. Court of Appeals for the D.C. Circuit remanded the case for further proceedings.
The panel stayed its decision to allow for a petition for re-hearing by the full court, holding that the firings cannot proceed until one week after the results of the petition, which could result in further delay and potentially reverse the decision.
“Today’s decision is a deeply disturbing development in the ongoing campaign to shutter the CFPB, which has defended people from unscrupulous practices by credit reporting companies, Wall Street banks, and big corporations, said Lauren Saunders, director of federal advocacy at the National Consumer Law Center.
“The CFPB was created after millions of people lost their jobs and homes in the Great Recession and has helped return $21 billion to 200 million consumers harmed by companies that violated the law,” said Saunders. “People need the CFPB to prevent financial companies from running roughshod over families, Veterans, and older adults.”
Leaves consumers exposed
Consumer advocates said that the dismantling of the CFPB left consumers without the essential protections previously provided by the agency, which has been virtually shut down since the Trump Administration took control.
"The administration’s attempts to dismantle the nation’s only consumer financial protection watchdog will expose millions of households to excessive fees and financial predators, and increase risk to the nation’s financial system. We need a strong, adequately staffed CFPB to protect consumers from exploitation by financial bad actors," said Mike Calhoun, president at the Center for Responsible Lending.
Sharp dissent
In her dissent, Judge Cornelia Pillard wrote: “Congress created the CFPB, assigned it important missions and powers, and subjected its decisions to the strong presumption of judicial review that applies as a matter of course to the final actions of federal agencies. It is untenable to hold that same Congress meant the agency’s continued existence to be a matter of unilateral and unexplained presidential edict.”
The case stems from a January lawsuit filed by the National Treasury Employees Union (NTEU), the National Consumer Law Center, the NAACP, the Virginia Poverty Law Center, the CFPB Employee Association, and Pastor Eva Steege, who had sought the agency’s help with student loan forgiveness before her death in April. Her husband, Ted Steege, has since joined the case as a plaintiff.