type: timeline_event
The full U.S. Court of Appeals for the District of Columbia Circuit held nearly three hours of oral arguments on February 24 in the National Treasury Employees Union's challenge to Acting CFPB Director Russell Vought's plan to lay off up to 90% of the Consumer Financial Protection Bureau's approximately 1,700 employees. The en banc hearing was the culmination of a legal battle that began when Vought - serving simultaneously as OMB Director and CFPB Acting Director in an unprecedented dual role - moved to gut the agency created after the 2008 financial crisis.
Jennifer Bennett of Gupta Wessler LLP, arguing for the union and co-plaintiffs, framed the case as "a fundamental separation of powers claim about the structure and very existence of an agency." She argued that Congress had created the CFPB by statute and the executive branch cannot effectively abolish a congressionally-mandated agency through mass layoffs that strip it of the capacity to perform its statutory duties. DOJ attorney Eric McArthur countered that laid-off employees must challenge individual terminations through the Merit Systems Protection Board rather than through court-ordered injunctions.
Judges pressed both sides hard, grappling with the core constitutional question of how much deference courts owed to executive branch restructuring decisions when they appeared to cross from reorganization into de facto elimination of a congressionally-established agency. The full court review was triggered after a three-judge panel split 2-1 in favor of the administration in late 2025, with two Trump-appointed judges siding with Vought.
The hearing came as GAO's January 27 report documented the scale of CFPB's dismantling: a planned 88% workforce reduction including 90% of the supervision division and 80% of the enforcement division; dismissal of 17 enforcement actions; rescission of 70 guidance documents; closure of CFPB headquarters; and termination of all regional office leases. The One Big Beautiful Bill Act had already halved CFPB's statutory funding cap. A separate report found the Trump administration's CFPB changes had cost American consumers $19 billion in lost protections, as enforcement actions that would have resulted in restitution were dropped. The D.C. Circuit's ruling would set a precedent for whether any independent regulatory agency created by Congress can be effectively abolished through executive personnel actions without a specific statutory repeal.