In a significant ruling on August 15, 2025, the U.S. Court of Appeals for the D.C. Circuit lifted a lower court’s injunction, allowing the Consumer Financial Protection Bureau (CFPB) to proceed with a planned reduction in force (RIF) that could eliminate approximately 80% of its workforce, about 1,400 of its 1,700 employees. The 2-1 decision, authored by Judge Gregory Katsas and joined by Judge Neomi Rao, has sparked controversy over the future of the CFPB, an agency established under the Dodd-Frank Act to protect consumers from predatory financial practices.
The case stemmed from a challenge by the National Treasury Employees Union (NTEU), the CFPB Employee Association, and other organizations, who argued that the Trump administration’s plan to drastically downsize the agency was an unlawful attempt to dismantle it, contravening congressional intent.
U.S. District Judge Amy Berman Jackson had issued a preliminary injunction in March 2025, agreeing that the administration’s actions appeared to be a “concerted, expedited effort to shut the agency down.” However, the D.C. Circuit’s majority ruled that the district court lacked jurisdiction, as federal employee termination disputes must first go through the Civil Service Reform Act’s administrative channels, such as the Merit Systems Protection Board (MSPB) or the Federal Labor Relations Authority (FLRA). Further complicating matters, the MSPB currently lacks a quorum to hear appeals, and the FLRA operates with only two members, split by party, potentially delaying resolutions.
The majority opinion emphasized that the CSRA’s review process, which allows for remedies like reinstatement and backpay, is the exclusive path for such claims, citing Supreme Court precedent. The decision vacated the injunction, clearing the way for the RIFs, which Acting CFPB Director Russ Vought justified as necessary to “right-size” the agency to focus on “tangible harms to consumers.”
Judge Cornelia Pillard dissented, arguing that at least one plaintiff had standing to challenge the CFPB’s actions in court and warning that the ruling risks enabling the executive branch to cripple a congressionally created agency. The NTEU decried the decision, stating it threatens the CFPB’s mission, which has returned over $21 billion to consumers since 2011. The union plans to seek a rehearing en banc, which could delay the layoffs. This ruling may set a precedent for challenges to federal RIFs and reorganizations, potentially limiting direct access to federal courts.
