The Justice Department told a federal appeals court on Wednesday that it has a new blueprint to shrink the Consumer Financial Protection Bureau to roughly 556 employees, a cut of about two thirds from the agency’s current size. The filing asks judges to lift a lower court stay that has blocked mass firings and to let the administration carry out the staffing plan while litigation plays out. If the court signs off, the overhaul would gut teams that investigate banks, supervise lenders and process consumer complaints.
In its submission to the U.S. Court of Appeals for the D.C. Circuit, the Justice Department laid out the staffing plan and argued that courts lack authority to interfere with personnel changes, according to Reuters. The filing says the CFPB’s Division of Supervision would lose about 85% of its positions and the enforcement division about 80%, leaving roughly 556 workers on the books. The DOJ also asked the appeals court to let the lower court revisit the stay that has kept most employees in their jobs while the legal fight continues.
Appeals Court Pushes Back
Judges on the D.C. Circuit pressed administration lawyers on whether the government can effectively dismantle a congressionally created agency. One judge warned that “the fundamental harm is that the agency does the work to protect the public,” reflecting skepticism described by Courthouse News. Legal experts say those exchanges highlight serious separation of powers questions that could keep the case tied up on appeal for months.
Union And Consumer Groups Push Back
Union leaders and consumer advocates blasted the proposal as an illegal giveaway that would leave everyday Americans more exposed to unfair lending practices and fraud. “Vought’s union busting is designed to traumatize workers into quitting so he can eliminate the CFPB without us standing in his way,” National Treasury Employees Union official Cat Forman said, as reported by Government Executive. Advocates say the bureau’s retreat from enforcement under the administration has already had measurable effects, and an analysis published by AP estimated the impact in the billions.
Why It Matters
Congress created the CFPB in the 2010 Dodd‑Frank law to police consumer finance markets and to give regulators the staff and authority to go after wrongdoers, according to a congressional research summary on Congress.gov. Cutting roughly two thirds of the bureau’s staff would drastically reduce examinations, slow enforcement actions and limit the agency’s ability to return money to consumers who were harmed.
Legal Road Ahead
The Justice Department’s latest filing asks the appeals court to let the staffing plan proceed while it considers whether the lower court overstepped, Reuters reports. If the judges agree with the administration that courts lack the power to block large scale firings, the ruling could quickly clear the way for the bureau to shrink. If they disagree, the plan could be blocked and tied up in lengthy appeals.
For now, the CFPB sits in legal limbo: most staff remain on the payroll but are operating under curtailed duties and sagging morale while courts decide how far executive power can go in reshaping an agency that Congress created to protect consumers. The D.C. Circuit’s decision will determine whether the bureau continues as an active regulator or gets reduced to a skeleton operation.
