A PYMNTS Company

Federal Judges Press Administration Over Attempted CFPB Workforce Cuts

By  |  February 25, 2026

Judges on Washington’s federal appeals court on Tuesday expressed skepticism toward the Trump administration’s argument that federal courts lack the authority to halt the mass dismissal of employees at the U.S. Consumer Financial Protection Bureau, according to Reuters.

    Get the Full Story

    Complete the form to unlock this article and enjoy unlimited free access to all PYMNTS content — no additional logins required.

    yesSubscribe to our daily newsletter, PYMNTS Today.

    By completing this form, you agree to receive marketing communications from PYMNTS and to the sharing of your information with our sponsor, if applicable, in accordance with our Privacy Policy and Terms and Conditions.

    The consumer protection agency has been largely inactive since February of last year as the administration continues to fight in court for approval to significantly reduce — or potentially eliminate — its workforce. Administration officials have publicly criticized the CFPB as an unnecessary and politicized obstacle to free enterprise, per Reuters, though government lawyers have maintained in court filings that there is no intention to abolish the agency outright.

    During arguments before the full 11-judge bench of the U.S. Court of Appeals for the District of Columbia Circuit, Deputy Assistant Attorney General Eric McArthur faced pointed questioning over whether a lower court acted within its authority when it blocked sweeping terminations at the bureau. The lower court had concluded that the administration’s actions amounted to an attempt to dismantle the agency, according to Reuters.

    McArthur argued that disputes over employee firings should be handled by the Merit Systems Protection Board (MSPB), a federal body that reviews certain personnel decisions. He also acknowledged that the administration lacks the authority to eliminate the CFPB entirely because Congress established the agency by statute. Judge Cornelia Pillard pressed the government’s position, asking, “If we were to affirm the district court’s finding that the government intended to shut down the agency, that changes the landscape doesn’t it?”

    Read more: Government Auditors Outline Dramatic CFPB Downsizing in New Congressional Report 

    In response, McArthur agreed that the executive branch must comply with the law but said “courts do not have unbridled authority to enforce that obligation.”

    The administration is separately pursuing efforts to curb the authority of the MSPB, which is designed to function independently in reviewing federal employment actions, according to Reuters.

    Representing a union of CFPB employees that filed suit to block the layoffs, attorney Jennifer Bennett contended that Congress did not envision the MSPB resolving constitutional disputes concerning separation of powers. “The claim here is not ‘I shouldn’t have been laid off’… but ‘this agency should not have been shut down,'” she said. “I heard the defendants admit that that claim can proceed in court.”

    The case has already seen significant procedural twists. In August, a divided three-judge panel of the appeals court determined that the lower court did not have jurisdiction to intervene, per Reuters. However, in December, the full appeals court reversed that decision and reinstated the lower court’s order while agreeing to rehear the matter.

    The outcome of the dispute could shape the balance of authority between the executive branch and the judiciary in overseeing federal agencies created by Congress, according to Reuters, as the administration continues its broader push to reshape the federal workforce.

    Source: Reuters