Judge orders Trump administration to fund CFPB

A federal judge on Tuesday ruled that the Trump administration must secure funding for a consumer watchdog agency or risk violating an existing court order barring its shuttering, rejecting a novel legal argument from the government.

U.S. District Judge Amy Berman Jackson ruled that the U.S. Consumer Financial Protection Bureau (CFPB) must continue to request funding and the Federal Reserve must provide it from its “combined earnings,” even when the central bank’s interest expenses exceed its earnings, so the agency can fulfill its statutory duties.

The Trump administration had pointed to a Justice Department memo from its Office of Legal Counsel (OLC) that concluded there were no funds legally available for the CFPB to request from the Fed.

Jackson suggested the administration “manufactured” a lapse in funding for the CFPB to justify its “unilateral decision” to abandon its obligations under her earlier court order keeping the agency intact.

“Neither the statute, the injunction, nor the Fed’s willingness to pay has changed; the only new circumstance is the administration’s determination to eliminate an agency created by Congress with the stroke of pen, even while the matter is before the Court of Appeals,” the judge wrote in a 32-page decision.

The ruling comes a day before officials said they expected to run out of sufficient funds to continue operations at the CFPB, effectively closing it down.

Jackson ruled in March that the administration could not dismantle the agency, which was an early target of Elon Musk and the Department of Government Efficiency (DOGE). 

At the time, she barred the administration from stopping work and firing employees, ordering the reinstatement of previously terminated workers, blocking the destruction of any CFPB records and requiring the rescission of any “wholesale” contract cancellations issued on or after Feb. 11. 

A federal appeals court panel overturned Jackson’s order barring the agency’s shuttering, but earlier this month, the full U.S. Court of Appeals for the D.C. Circuit agreed to hear the case and vacated the panel’s ruling.

“It appears that defendants’ new understanding of ‘combined earnings’ is an unsupported and transparent attempt to starve the CPFB of funding and yet another attempt to achieve the very end the Court’s injunction was put in place to prevent,” Jackson wrote in her Tuesday ruling.