Recap of Administration Attempt to Fire Employees of the Consumer Financial Protection Bureau

Early in the administration, it looked like the Consumer Financial Protection Bureau was being singled out for harsh treatment, bordering on demolition. Now, it looks more like the CFPB is being treated like most administrative agencies that protect against industry abuses or discrimination. Still, the CFPB is different because it and its employees are supposed to be insulated from hostile administrations. This post provides on update on the back and forth between the administration and the courts in the CFPB’s struggle for survival. This topic if a moving target, so this update likely will not be the last.

The latest round began when CFPB director Russel Vought (right) announced that the agency would lay off over 1400 of its 1700 employees.  As Judge Amy Berman Jackson noted in an April 18th Order, that action came within four days of a decision by the D.C. Circuit that was informed by the government’s "representations that the Bureau would continue to perform its mandatory statutory duties and that it was engaged in nothing more than a typical reevaluation of policy priorities at the start of a new administration rather than the wholesale elimination of an agency.” 

Without quite saying so, Judge Jackson (left) clearly thinks that the government cannot be trusted. Its actions were inconsistent with the representations made to the D.C. Circuit and with the D.C. Circuit’s relaxation of Judge Jackson’s earlier order. Moreover, Judge Jackson determined that "a RIF that will decimate the agency and render it unable to comply with its statutory duties is underway” and that it would be completed before any court could make a determination on the merits of its legality. She entered a new order on April 18th suspending the agency action and prohibiting the agency “from discontinuing any employee’s access to work systems, including email and internal platforms."

I don’t know whether the CFPB is continuing to function. A court can order the government not to fire employees, but what are those employees to do if the directors of the agency refuse to carry out its functions?

Update: As I learned from Chris Geidner on Law Dork, the D.C. Circuit Special Panel, which hears emergency appeals, issued a new Order on Monday. The government had sought clarification of what constitutes a "particularized assessment” of whether the dismissed CFPB employees’ were necessary to the performance of the agency’s statutory duties. The panel responded by reinstating a part of the District Court’s injunction that had been stayed. The government will remain enjoined from further RIFs until the merits of the challenge to those RIFs can be adjudicated.

Chris Geidner notes that Judge Gregory Katsas, White House counsel, appointed to the D.C. Circuit by the current President and White House Counsel during his first Presidency, joined in the 2-1 majority. That is a striking evolution. Even people at the heart of the first iteration of the current President’s attempts to dismantle constitutional legal norms now see just how dangerous the threat to separation of powers and the rule of law has become. Not so dissenting Judge Naomi Rao. She wants to f around with the CFPB and find out whether a 1700-employee agency with significant regulatory duties mandated by Congress can still fulfill its mission with only 200 employees.