A federal judge has ruled against the White House’s effort to defund the Consumer Financial Protection Bureau, ensuring staff payments continue amid lawsuits challenging acting director Russell Vought’s moves to halt funding from the Federal Reserve.
In New York, a US district court judge on Tuesday blocked the Trump administration’s attempt to lapse funding for the Consumer Financial Protection Bureau, just days before its reserves were projected to run out, preventing the layoff of employees at the agency led by acting director Russell Vought.
Court Ruling Halts Immediate Funding Crisis
The ruling came in a case brought by the National Treasury Employees Union, which represents CFPB workers, against Russell Vought and the agency, arguing that his refusal to request funds from the Federal Reserve violates statutory requirements and aims to dismantle the bureau established by Congress, according to reporting by the Associated Press.
As reported by Julia Demaree Nikhinson for Associated Press, the CFPB has been largely inoperable since President Trump returned to office in January 2025, with employees forbidden from most work and operations focused on unwinding prior activities.
Multiple Lawsuits Challenge Vought’s Funding Decisions
Several lawsuits have targeted Russell Vought’s actions as acting director of the CFPB, including a complaint filed in the US District Court for the Northern District of California by a coalition of federal government employee unions and nonprofits, which accuses him of misinterpreting the funding statute to exhaust resources in weeks, according to Public Citizen.
According to the Los Angeles Times, California joined 20 other states and the District of Columbia in a lawsuit filed on Monday in US District Court in Eugene, Oregon, alleging Vought is illegally withholding funds by disputing the agency’s funding statute and naming the CFPB and Federal Reserve Board of Governors as defendants.
Plaintiffs Highlight Statutory Violations and Consumer Risks
The California lawsuit states that defendant Russell T Vought has worked to terminate CFPB operations by denying access to statutorily entitled resources, as reported by the Los Angeles Times.
Public Citizen reports that the Northern California complaint explains Vought is required by law to determine the amount reasonably necessary for CFPB responsibilities and request it from the Federal Reserve Board, with no discretion to refuse, and criticises his misreading of the statute on Federal Reserve earnings.
Agency Actions Signal Broader Dismantling Efforts
Russell Vought, appointed acting director by President Trump upon his return to office in January 2025, issued a stop-work order within days, refused to request critical funds, instructed employees not to return to offices, cancelled $100 million in contracts, and began firing staff, actions plaintiffs allege violate separation of powers by eliminating a congressionally established agency, according to Democracy 2025.
The American Prospect reports that a White House legal office opinion, at Vought’s behest as Office of Management and Budget director, redefined “earnings” to prevent further Federal Reserve transfers, claiming funds will exhaust by early 2026, despite a continuing resolution barring reductions in force through January 30, 2026, without regard to funding source.
According to the Consumer Finance Monitor, Vought informed President Trump and Congress that the CFPB requires $279.6 million for statutorily mandated operations through September 30, 2026, but expects funds to run out in the first quarter of fiscal year 2026 without requesting additional amounts, fulfilling only a notification duty under law.
The CFPB has dropped enforcement actions, including a lawsuit against Zelle and its bank backers for fraud failures, and cases against student loan servicer Navient for cheating borrowers and Toyota Motor Credit for discriminatory interest rates to Black and Asian customers, as reported by the Los Angeles Times.
Stakeholder Reactions and Historical Context
Paulina Gonzalez-Brito, CEO of Rise Economy, stated: “In an environment where predatory lenders and online scammers are becoming increasingly more sophisticated at siphoning money out of consumers’ pockets, the actions of this Administration to shut down the only federal agency charged with protecting consumer’s financial wealth are reprehensible. Simply put, Americans can’t afford another mortgage crisis or for financial predators to go unchecked,” according to Public Citizen.
She added: “This lawsuit is about ensuring the nation’s consumer watchdog has the resources to do the job Congress mandated. By refusing to request the full funding authorized by statute, CFPB leadership is weakening the very agency entrusted to protect working people from financial abuse and discrimination. When enforcement is stifled, low-income Black, Latino, Asian American, Native, and immigrant families are the hardest hit – communities that have been targeted by financial predators for generations. We’re asking the court to require the Director to follow the law, secure the resources the Bureau is entitled to, and restore its ability to hold powerful financial actors accountable.”
Vought, architect of Project 2025—a Heritage Foundation plan to reduce federal bureaucracy—ordered the agency in February 2025 to stop nearly all work and has sought to downsize it drastically, according to the Los Angeles Times.
In an October media appearance, Vought indicated the bureau expects to cease operations in two or three months, as reported by the Consumer Finance Monitor, amid rising delinquencies in credit cards, student loans, and auto loans near record highs since the CFPB’s 2010 establishment, per The American Prospect.
The National Treasury Employees Union previously won a preliminary injunction stopping mass layoffs, with recent filings asserting a novel definition of “combined earnings” to defund the agency, according to the Consumer Finance Monitor and Associated Press.
Mayor and City Council of Baltimore and Economic Action Maryland Fund have also sued Vought and the CFPB over defunding, as noted by Democracy 2025.
Implications for Consumer Protections and Legal Battles
The judge’s ruling ensures CFPB employees receive pay, blocking Vought’s effective shutdown and layoffs, though the agency remains hampered, with ongoing cases like the union’s successful challenges, according to Associated Press reporting.
Plaintiffs argue Vought’s moves undermine consumer protections on credit reporting, discriminatory lending, and litigation recovering billions, at a time of increasing financial vulnerabilities, as stated by Democracy 2025 and The American Prospect.
These legal efforts represent the latest attempts to sustain the agency against administration plans expressed since January 2025, per the Los Angeles Times.
The CFPB informed stakeholders it will need $279.6 million for FY2026 mandated activities but anticipates exhaustion without further requests, highlighting the disputed funding path forward, according to the Consumer Finance Monitor.
Federal lawsuits in California, Oregon, and New York courts continue to contest Vought’s interpretations and operational halts, seeking to compel statutory funding compliance.
The ruling preserves immediate operations and staff payments at the Consumer Financial Protection Bureau, while multiple lawsuits proceed against acting director Russell Vought’s funding refusals and shutdown measures, as reported across outlets including Associated Press, Los Angeles Times, and Public Citizen.
