The Trump administration said in a court filing that the Consumer Financial Protection Bureau will continue to exist — albeit with a reduced budget and lower headcount — and blamed the bureau’s closure on protests that occurred after the agency was shuttered.
In a legal brief filed Monday, the Justice Department defended the actions of acting CFPB Director Russell Vought, who this month fired 170 temporary and short-term employees, shut the agency’s headquarters in Washington D.C., and placed the bureau’s remaining 1,500 employees on administrative leave.
“As acting director Vought noted in a letter to the Federal Reserve, the ‘Bureau’s new leadership will run a substantially more streamlined and efficient bureau,'” the Justice Department said in its
The brief also stated that the CFPB under Vought “is committed to performing its statutory obligations,” and the bureau “will … do its part to reduce the federal deficit.”
The Justice Department filed the brief in opposition to a request for a preliminary injunction by the National Treasury Employees Union and other groups that asked the court to stop mass firings of CFPB employees and halt the removal or deletion of data covered by the Federal Records Act. A hearing on the preliminary injunction has been set for March 3.
The Justice Department said Vought’s actions were part of the Trump administration’s efforts to pause the bureau’s work while it reevaluates policies made during the Biden administration.
Vought issued a
“Defendants’ decision-making fits comfortably within this Executive Branch practice of short-term pauses in order to determine how best to implement programs consistent with the President’s policy objectives and underlying law, and therefore is not violative of separation of powers principles,” the brief states.
The Justice Department also falsely claimed that it closed the CFPB’s Washington D.C. headquarters in response to protests by employees — even though the
The Justice Department said that the protests involved “large and disruptive gatherings” outside of the CFPB headquarters building. It claimed that Vought’s arrival at the CFPB “coincided with a series of episodes of an extraordinary and disruptive nature,” including a meeting that was disrupted between CFPB management and the Department of Government Efficiency.
“Several protestors followed and questioned other CFPB staff members, making them feel harassed,” the brief said. “Given these disruptive protests involving the CFPB’s own staff, CFPB leadership has closed the CFPB Headquarters Building and tightened staff supervision, making sure that they are focused only on aspects of the mission that are, in fact, urgently required by law, as determined by the Chief Legal Officer.”
Several CFPB employees, who spoke on the condition of anonymity for fear of retribution, said they did not find the government’s claims to keep the bureau operating reassuring. Some said they found it laughable that Vought and other Trump administration employees were frightened by the protestors.
The Trump administration said it plans to cancel the lease on the CFPB’s headquarters, which has not yet happened, and the bureau “will have thirty days to move out.” CFPB leaders will “evaluate options for alternative office space once the Bureau has ascertained the amount of office space it will need to carry out its more streamlined operations, such as those required by statute and those for which physical office space is necessary.”
The government’s brief was signed by Deputy Assistant Attorney General Eric J. Hamilton,
Special Counsel Brad P. Rosenberg, and Trial Attorney Liam C. Holland of the Justice Department’s civil division.
The Justice Department did not respond in the brief to major questions raised by the NTEU’s lawyer Deepak Gupta about whether CFPB data has been accessed by Trump advisor Elon Musk and the Department of Government Efficiency, a rebranded version of the U.S. Digital Service. The Justice Department’s brief repeatedly referred to a declaration by Adam Martinez, the CFPB’s chief operating officer and the most senior career official, that DOGE members followed procedures and received privacy and cyber-security training before accessing data.
Gupta, the founding principal of the law firm Gupta Wessler, told Berman Jackson earlier this month that the risks to CFPB data are far-reaching and that Musk and DOGE employees gained access to all data involving bank and payment contracts, the consumer complaint database and personal financial information on the bureau’s employees. He is expected to argue that a preliminary injunction is warranted because there is no way of knowing whether CFPB employees were locked out of the agency’s headquarters to gain access to sensitive data, including bank trade secrets that could be used for commercial purposes. DOGE was created by executive order soon after Trump was sworn in in January, and is aimed at reducing federal spending to pay for an extension of Trump’s 2017 tax bill.
Banking experts said the legal brief combined with the Senate Banking Committee’s hearing this Thursday to confirm
“Our expectation is that the CFPB will continue to operate and will look similar this term to the way it looked during the first Trump administration, and it is consistent with Jonathan McKernan being the nominee and having a hearing this week,” said Chris Willis, a partner at the law firm Troutman Pepper LLP.
The union has claimed that Vought was illegally appointed acting CFPB director under the Federal Vacancies Reform Act because former CFPB Director Rohit Chopra did not die, resign, or become “unable to perform the functions and duties of the office,” but rather was fired by President Trump.
The Justice Department said in the brief that the claim “is difficult to square” with the statute.
“The Government’s position is simple: Removal is an event that would render an officer ‘unable to perform the functions and duties of the office,'” the brief states.
The Trump administration sought to portray the NTEU’s lawsuit as primarily a challenge to policy decisions governing federal employees. It claims that disputes about federal employment must be adjudicated through an administrative process — either before the Merit Systems Protection Board for employment disputes or the Federal Labor Relations Authority for labor disputes.”
“Plaintiffs here do not allege any concrete harm,” the brief stated, and referred to harm as “the risk of criminal or civil penalties.”
