CFPB Shutdown Fight Heads To Full D.C. Circuit

The fight over whether the Trump administration can effectively shutter the Consumer Financial Protection Bureau has moved to the full U.S. Court of Appeals for the D.C. Circuit, which will hear en banc argument on February 24, 2026, with the fate of Judge Amy Berman Jackson’s injunction—and practically the agency’s viability—at stake.

What the case is about

• The National Treasury Employees Union (NTEU) and other plaintiffs sued to block the administration’s plan to dismantle the CFPB, arguing the executive cannot abolish or neutralize a congressionally created agency by “shutdown-by-stealth” tactics like mass RIFs, contract cancellations, and funding refusals.

• They allege these coordinated steps amount to a de facto decision to close the Bureau, violating Dodd‑Frank and separation‑of‑powers principles that reserve agency creation and abolition to Congress.

How we got to the en banc D.C. Circuit

• In March 2025, Judge Amy Berman Jackson issued a preliminary injunction blocking the administration from carrying out sweeping reductions in force, halting work, returning funding, and other measures aimed at dismantling the CFPB.

• A divided D.C. Circuit panel (Judges Katsas and Rao in the majority) later vacated that injunction, holding that the alleged overarching “decision to shut down” the CFPB was too abstract to qualify as reviewable “final agency action” under the APA and that much of the employment‑related relief had to go through civil service channels.

• Plaintiffs petitioned for rehearing en banc, warning that the panel’s approach would green‑light an effective CFPB shutdown without any meaningful judicial review.

The current posture at the D.C. Circuit

• On December 17, 2025, the D.C. Circuit granted rehearing en banc in NTEU v. CFPB (sometimes captioned NTEU v. Vought), vacated the panel’s judgment, and set en banc oral argument for February 24, 2026, at 2:00 p.m.

• Vacating the panel opinion strips it of precedential effect and, in conjunction with earlier orders, has left much of Judge Jackson’s injunction in place pending the en banc decision, meaning the administration is currently constrained from fully executing its shutdown playbook.

• The CFPB’s union filed an en banc brief on February 2, 2026, urging the full court to uphold the injunction and to reaffirm that the executive cannot unilaterally close a congressionally created agency or evade APA review by slicing a single shutdown plan into many discrete acts.

What the en banc court will likely decide

• Jurisdiction and reviewability: Whether the constellation of actions (mass RIFs, stop‑work orders, contract cancellations, declining funding) can be treated collectively as “final agency action” subject to APA review, or whether plaintiffs must challenge only discrete employment actions through civil service processes.

• Separation of powers and executive authority: Whether an administration may effectively neutralize or “mothball” the CFPB—by downsizing it to a skeletal form or starving it of staff and resources—without violating Congress’s decision in Dodd‑Frank to create a functioning consumer protection regulator.

• Scope of injunctive relief: If review is allowed, how far federal courts can go in prescribing or limiting executive management decisions (RIF size, funding requests, office closures) while still respecting the President’s control over the executive branch.

Why this matters for the CFPB and markets

• A ruling for NTEU that affirms jurisdiction and upholds robust injunctive relief would significantly constrain the administration’s ability to gut or freeze the CFPB without new legislation, preserving a more operational agency (even if politically pressured).

• A ruling that adopts the original panel’s reasoning could give the White House a roadmap to render the CFPB essentially nonfunctional through staffing and budgeting maneuvers while claiming no reviewable “shutdown” decision exists, accelerating the deregulatory shift already anticipated by industry observers.

• In the meantime, the CFPB has confronted funding issues, explored transferring active litigation to DOJ, and sought direct appropriations, reflecting both legal and practical uncertainty about its ability to operate while this fight plays out.