A federal district court judge ruled on Tuesday that the Trump administration can't allow funding for the Consumer Financial Protection Bureau to lapse, saying that acting CFPB director Russell Vought's legal argument for cutting off funds isn't valid, according to media reports.
Judge Amy Berman ruled that the CFPB should continue to get its funds from the Federal Reserve, even though the Fed is operating at a loss, the Associated Press reported. Vought has contended that the agency isn't legally allowed to pull funds from the central bank because it's not operating at a profit.
Soon after Trump took office, the CFPB's operations have been drastically curtailed, with most of its employees told not to do any work. Meanwhile, most of its operations have been focused on undoing work conducted under the Biden administration.
Vought has stated his intention to effectively shut down the CFPB. Earlier this year, the administration issued a reduction-in-force that would have furloughed or laid off much of the bureau. The National Treasury Employees Union, though, filed a suit and won a preliminary injunction to stop the layoffs while the suit proceeded. That's when Vought put forth the argument focusing on the Fed's profitability.
"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," Berman wrote in an opinion.
The CFPB was created through an act of Congress in the wake of the 2008-09 financial crisis to protect consumers from predatory financial conduct by banks and other businesses.
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