Court upholds certain CFPB dismissals
The Consumer Financial Protection Bureau (CFPB) is facing significant changes after a federal appeals court ruling on May 16, 2025. The decision permits the Trump administration to proceed with mass layoffs and dismantling efforts, which could potentially affect around 90% of the agency’s staff, or approximately 1,482 employees [1][4].
Prior to this ruling, a preliminary injunction granted by Judge Amy Berman Jackson of the U.S. District Court for the District of Columbia on March 28 had halted the CFPB from issuing Reduction-in-Force (RIF) notices and required the agency to reinstate all probationary and term employees it had dismissed since February 10 [2]. However, the appeals court's decision did not immediately take effect, allowing for ongoing legal reconsideration and temporarily putting dismissal notices on hold [1].
The operational capacity of the CFPB has been severely impacted by these mass firings. Some offices have been left depleted or understaffed, diminishing their ability to perform legal and regulatory duties effectively [1]. Despite this, the CFPB's consumer complaint database remains active, with staff still responding to complaints, although the agency’s overall work has drastically scaled back due to the mass layoffs [2].
The CFPB's union, led by President Cat Farman, has expressed concern about the potential for Acting Director Russ Vought to illegally fire employees with the permission to conduct RIFs [3]. Meanwhile, the U.S. Court of Appeals for the District of Columbia Circuit has rolled back parts of Berman Jackson's injunction, preserving the agency's data, reinstating previously canceled contracts, and striking down Vought's stop-work order [5].
As the CFPB undergoes these transformative changes, there are various schools of thought on how to disrupt the banking space among fintech disruptors. Each approach is unique, offering potential for innovation and improvement in the financial industry [6]. The CFPB's union has emphasised the points that stand in Berman Jackson's order, which still maintains some protections for the agency [5].
Oral arguments before the appeals panel are set for May 16, providing further insight into the ongoing legal considerations surrounding the CFPB's mass layoffs and the future of the agency.
[1] The Washington Post [2] Bloomberg [3] CNBC [4] Reuters [5] Politico [6] Forbes
- The policy-and-legislation surrounding the Consumer Financial Protection Bureau (CFPB) is under intense scrutiny as a result of the federal appeals court's decision allowing mass layoffs and dismantling efforts, which has raised concerns in politics and general news.
- The business implications of the CFPB's mass layoffs, which have severely impacted its operational capacity, are yet to be fully understood, but fintech disruptors are already positioning themselves to potentially capitalize on any disruptions in the banking space.
