Court rejects Baltimore’s bid to block CFPB funding cuts

A federal court in Maryland Friday rejected the city of Baltimore’s attempt to block an alleged effort to defund the Consumer Financial Protection Bureau, ruling that the municipal plaintiffs failed to show the agency had made a final decision undermining its statutory duties.

While plaintiffs argued that recent actions or inactions by the CFPB signaled an effort to dismantle the agency’s financial capacity, the decision, signed by U.S. District Judge Matthew J. Maddox of the District of Maryland, questioned whether actions by the Trump administration amounted to a concrete agency action. 

“Plaintiffs fail to make a clear showing that any such decision was made and constitutes a final agency action subject to judicial review under the APA,” a judicial filing noted. “Because Plaintiffs fail to demonstrate a likelihood of success on the merits of their claims, their motion for the extraordinary remedy of preliminary injunctive relief must be denied.”

In February, the City of Baltimore and Economic Action Maryland filed a lawsuit against the CFPB and its Trump-appointed acting director, Russell Vought, in the U.S. District Court for the District of Maryland. The municipal plaintiffs sought an injunction preventing the agency from depleting or reallocating its funds, alleging Vought’s and others’ actions violated the terms of a bedrock administrative law, the Administrative Procedure Act. 

The plaintiffs point to several key actions, including the CFPB’s request for zero dollars from the Federal Reserve for the third quarter of the fiscal year, its chief financial officer’s alleged interest in returning agency funds back to the Federal Reserve, its closure of the bureau headquarters from February 10 through 14 and its directive to employees to stop working. During the first Trump administration, acting CFPB Director Mick Mulvaney also requested no funding from the Federal Reserve in the second quarter of fiscal year 2018, but noted it planned to use reserve funds to continue work at the agency.

By contrast, Vought’s letter to Fed Chair Jerome Powell in February requesting zero dollars for the third quarter of fiscal year 2025 indicated the agency would run at a reduced capacity and questioned the statutory need for a reserve fund. 

“The Bureau’s current funds are more than sufficient — and are, in fact, excessive — to carry out its authorities in a manner that is consistent with the public interest. In the past, the Bureau has at times opted to maintain a ‘reserve fund’ for financial contingencies,” Vought wrote. “But no such fund is required by statute or necessary to fulfill the Bureau’s mandate. The Bureau’s new leadership will run a substantially more streamlined and efficient bureau, cut this excessive fund, and do its part to reduce the federal deficit.”

During fiscal year 2024, former CFPB Director Rohit Chopra requested four transfers from the Fed amounting to $729.4 million, according to the CFPB’s 2024 annual report.

In February, a federal judge in Washington, D.C., temporarily blocked the CFPB from laying off more employees after over 100 workers had already been fired. The ruling came after the National Treasury Employees Union filed a lawsuit to stop further staff cuts.