CFPB Facing Cuts Awaits Court Decision

“Consumer guardrail facing cuts waits on court decision” refers to ongoing legal and political efforts to shrink the Consumer Financial Protection Bureau (CFPB) and a key appeals‑court case that will determine how far those cuts can go.

What is happening to the CFPB?

• The Trump administration has delayed funding and moved to lay off a large share of CFPB staff and cancel contracts, which would sharply curtail the bureau’s ability to operate.

• A federal judge previously issued a temporary injunction blocking most layoffs and contract cancellations, keeping the agency functioning for now.

• Separately, Congress and the White House already cut the CFPB’s budget nearly in half through the 2025 “One Big Beautiful Bill Act,” reducing its funding cap from 12% to 6.5% of the Federal Reserve’s 2009 operating expenses.

The pending court decision

• An en banc panel of 11 judges on the U.S. Court of Appeals for the D.C. Circuit is scheduled to meet on February 24 to decide whether to keep the injunction that is blocking mass layoffs and other cutbacks.

• If the court lifts the injunction, the administration could move ahead with large-scale staff reductions and contract cancellations; if it upholds the order, the CFPB’s current staffing and operations are more likely to remain in place while litigation continues.

• A separate federal case has already ordered the administration to continue seeking and accepting funding for the CFPB rather than trying to “starve” the agency by manufacturing a funding shortfall.

How this fits with Supreme Court rulings

• In May 2024, the U.S. Supreme Court upheld the constitutionality of the CFPB’s funding structure, confirming that Congress may fund the bureau through the Federal Reserve rather than annual appropriations and that this setup satisfies the Appropriations Clause.

• That decision means the current fight is not about whether the CFPB is constitutional, but about how much money and staff it will actually have and whether the administration can effectively cripple it through cuts and non‑funding strategies.

Why it matters for consumers

• Since its creation in 2011, the CFPB has returned more than $21 billion to consumers through enforcement and supervision, including refunds, canceled debts, and other relief.

• Consumer advocates warn that deep budget and staffing cuts could sharply reduce enforcement against abusive lenders, hidden fees, and fraud, leaving households more exposed to financial harm.

• Business groups and some lawmakers argue that the cuts will restrain what they see as overreach and force the bureau to be more targeted and fiscally constrained.