CFPB Shutdown Hearing Probes Courts’ Sway Over Trump-Era Firings

Appellate judges in Washington grappled with whether a lower court overstepped by blocking Russell Vought, acting chief of the Consumer Financial Protection Bureau, from firing 90% of the agency’s staff and otherwise shutting it down.

At a nearly three-hour hearing Tuesday, judges on the full US Court of Appeals for the District of Columbia Circuit tested how far courts should go to limit the Trump administration’s moves rolling back the consumer finance watchdog created after the 2008 financial crisis.

Eric McArthur, a Justice Department attorney representing the CFPB, argued the preliminary injunction—since vacated by a three-judge DC Circuit panel—was based on erroneous facts. There was never a final decision to shut down the agency, and the CFPB employees who sued to stop Vought should’ve brought their claims through the Merit Systems Protection Board, he added.

“Here the MSPB has exclusive jurisdiction over reinstatement of employees,” he said.

But McArthur faced stiff pushback, most notably from Judges Cornelia T.L. Pillard and Patricia A. Millett, both Obama appointees. Pillard sat on the panel that vacated the preliminary injunction and dissented from the opinion.

“What you want us to hold is that the CSRA has tentacles that reach across the entire litigation system” and block courts from preserving offices that Congress created, Millett said, referring to the Civil Service Reform Act that created the MSPB.

The National Treasury Employees Union and other plaintiffs sued to block Vought from gutting the CFPB last February, just after he took helm of the agency and kept in place a broad stop-work order originally set by Treasury Secretary Scott Bessent, who briefly served as acting director.

‘They Want Nothing’

The NTEU plaintiffs are making a bigger argument than preserving any particular jobs, Jennifer Bennett, a Gupta Wessler LLP principal representing the union and its co-plaintiffs, said at the arguments.

“This is a fundamental separation of powers claim about the structure and very existence of an agency,” she said.

Many of the judges appeared open to the idea of allowing some form of injunction to remain in place to keep the CFPB functioning while courts deal with substantive questions about the Trump administration’s plan for the agency.

But they struggled with what that should look like.

“You want everything, and they want nothing,” Pillard told Bennett.

Firings Blocked

Judge Amy Berman Jackson of the US District Court for the District of Columbia last March issued a preliminary injunction aimed at blocking the mass firings and forcing the CFPB to perform functions mandated by the 2010 Dodd-Frank Act, such as maintaining its consumer complaint database.

A split DC Circuit panel lifted Jackson’s injunction in August 2025, opening the door for Vought to fire most CFPB staff members and take other actions to cut down the agency.

Judges Neomi Rao and Gregory Katsas held that Jackson lacked jurisdiction to issue the preliminary injunction and that the plaintiffs had failed to prove Vought’s plans to fire CFPB workers, cancel contracts, and wind down the agency constituted final actions subject to challenge under the Administrative Procedure Act.

Pillard in her dissent said the preliminary injunction was necessary to maintain the status quo while courts determined the legality of the Trump administration’s moves.

The union and its co-plaintiffs subsequently pushed for a full DC Circuit review of the panel decision, which was granted in December.

The case is NTEU v. Vought, D.C. Cir., No. 25-05091, oral arguments 2/24/26.