CFPB Faces Mass Layoffs as Court Battles Vought’s Defunding Plan

Acting CFPB Director Russell Vought has agreed to delay defunding the agency until February 28 while continuing mass layoffs, with up to 95% of staff at risk. Baltimore and Economic Action Maryland Fund sued to stop the defunding, arguing it violates congressional authority. The court will decide whether Vought can proceed with financial restrictions and workforce cuts.

CFPB Faces Mass Layoffs as Court Battles Vought’s Defunding Plan

Vought Agrees to Delay CFPB Defunding Amidst Workforce Layoffs

Acting Consumer Financial Protection Bureau (CFPB) Director Russell Vought has temporarily halted plans to eliminate the agency’s budget for at least two weeks while continuing to significantly downsize its workforce. This development comes in response to a lawsuit filed by the City of Baltimore and Economic Action Maryland Fund, which argues that Vought’s actions violate congressional authority by attempting to dismantle a federal agency unilaterally.

The Trump administration has agreed to delay any efforts to defund the CFPB until a court hears the case. The legal challenge, filed on February 12, seeks an injunction to prevent Vought from stripping the agency of its financial resources.

Legal Challenge and Court Proceedings

Baltimore and Economic Action Maryland Fund claim that the CFPB’s elimination would have severe consequences for consumer protection. The city relies on CFPB consumer complaint data to safeguard residents, enforce financial regulations, and carry out other key functions.

On Thursday, both parties filed a joint motion for a briefing schedule, asking Judge Adam B. Abelson of the U.S. District Court for the District of Maryland to determine whether Vought has the legal authority to reallocate CFPB funds or otherwise restrict its financial operations.

As part of the agreement, Vought has committed to suspending any transfers from the CFPB’s reserve accounts and halting any return of funds to the Federal Reserve or the U.S. Treasury until at least February 28, unless the court issues an alternative ruling.

Baltimore’s motion for a temporary restraining order has also been converted into a request for a preliminary injunction. If granted, this would further restrict Vought’s ability to interfere with the CFPB’s financial operations until a full legal decision is reached.

Workforce Reductions Continue

Despite the pause in budget cuts, Vought is continuing to implement significant workforce reductions. On Thursday, approximately 100 CFPB employees were dismissed. Those affected included career civil servants with fixed-term contracts, such as fellows, members of the director’s Financial Analyst program, and technologists responsible for monitoring Big Tech’s involvement in consumer finance.

According to an amended complaint filed by the National Treasury Employees Union (NTEU) in the U.S. District Court for the District of Columbia, Vought is preparing to lay off up to 95% of the agency’s staff as soon as Friday.

The lawsuit from NTEU and other plaintiffs argues that these mass terminations are part of a broader effort to dismantle the CFPB by undermining its ability to function. Employees impacted by the cuts are essential to the agency’s mission, including enforcement of consumer protection laws, oversight of financial institutions, and investigations into financial misconduct.

Legal Representation and Next Steps

The City of Baltimore and Economic Action Maryland Fund are represented by the Democracy Forward Foundation. Meanwhile, the NTEU and other plaintiffs have enlisted legal representation from Gupta Wessler LLP and Public Citizen Litigation Group.

The court’s upcoming decision will play a critical role in determining whether Vought can proceed with his plans to defund the CFPB and continue large-scale layoffs. If the court rules against him, the agency could maintain its funding and staffing levels. However, if the court sides with Vought, it could mark a major shift in the future of federal consumer protection efforts.