A federal judge has delivered a significant blow to the Trump administration's efforts to dismantle a key US consumer protection agency, ordering it to continue funding the Consumer Financial Protection Bureau (CFPB).
Judge Rejects 'Manufactured' Funding Argument
In a strongly-worded 32-page decision, District Judge Amy Berman Jackson in Washington DC rejected the administration's justification for cutting off the CFPB's money. The agency's acting director, Russell Vought, had argued that the Federal Reserve could not fund the CFPB because it was operating at a loss.
Judge Jackson dismissed this as a "manufactured" crisis created by the defendants. She stated the argument was based solely on a legal memo and was not a valid reason to ignore a previous court order protecting the agency. "The only new circumstance is the administration’s determination to eliminate an agency created by Congress with the stroke of a pen," she wrote.
A Last-Minute Reprieve for the CFPB
The ruling came just days before the CFPB was due to run out of the money needed to pay its employees. Judge Jackson noted that funding had flowed "seamlessly" since the bureau's creation in 2011, even during periods when the Federal Reserve's expenses exceeded its earnings.
The legal action was brought by the National Treasury Employees Union, which represents CFPB workers. They had already secured an injunction from Judge Jackson earlier this year to stop mass firings and the agency's dismantling. The US Court of Appeals for the DC Circuit has upheld that injunction and will hear the broader case on defunding the entire CFPB in February 2026.
Political Reactions and Wider Implications
Prominent Democratic senator Elizabeth Warren, a key architect of the CFPB, praised the decision. She highlighted that the agency has returned $21 billion to Americans harmed by corporate malpractice. "If courts continue to uphold the law, they’ll keep blocking Russ Vought’s illegal attempts to 'close down' the agency," Warren stated.
The ruling represents another legal hurdle for the Trump administration's agenda to shrink federal regulatory bodies. The White House did not immediately comment on the judge's decision. The case continues to be a focal point in the ongoing battle over the scope and power of US consumer financial protection.
