WASHINGTON (CN) — A D.C. Circuit panel seemed skeptical on Wednesday that the full extent of a federal judge’s order preventing the Trump administration from dismantling the Consumer Financial Protection Bureau can stand.
The Justice Department challenged U.S. District Judge Amy Berman Jackson’s broad injunction, arguing that it exceeded the Barack Obama appointee’s authority and impeded on the White House’s ability to manage the executive branch as it saw fit.
The three-judge panel temporally lifted all but a few provisions — preventing the mass termination of contracts, employees and funding for the agency — on Thursday on the government’s indication that it would not touch the bureau in the meantime.
Justice Department attorney Eric McArthur argued that President Donald Trump’s Feb. 11 executive order, which established the Department of Government Efficiency and instructed federal agencies to conduct mass reductions in force, was wrongfully being impeded.
“That is a key presidential policy initiative that has been stopped dead in its tracks at the bureau as a result of this injunction, and every day that injunction remains enforced inflicts irreparable harm on our democratic system of government,” McArthur said.
In the March 28 order, Jackson specifically required the administration to maintain all agency records; reinstate terminated probationary and term employees; not terminate employees without cause; not enforce a stop-work order; ensure employees could perform statutorily mandated functions; maintain the Office of Consumer Response hotline, website and database; and rescind contract terminations.
McArthur urged the three-judge panel to freeze Jackson’s injunction, force the district court to “stay within its constitutional lane” and further tailor her order.
U.S. Circuit Judge Cornelia Pillard, an Obama appointee, seemed unconvinced that the apparent harm to the president’s policy agenda outweighed the clear harm the public would suffer with a severely limited consumer protection agency.
“The fundamental harm is that the agency does the work to protect the public,” Pillard said. “Elders who are being offered things and told there’s no cost to them, and in fact, they’re agreeing to many hidden fees, or somebody who takes out a loan and doesn’t realize their entire home has somehow become collateral and then foreclosed on.”
Pillard added that the record clearly showed such irreparable harms had already occurred between the arrival of Department of Government Efficiency and White House Office of Management and Budget personnel and an initial court order on Feb. 14.
McArthur pushed back, arguing that the plaintiffs — a coalition of federal employee unions, advocacy groups and the husband of recently deceased retired pastor Eva Steege who was receiving CFPB guidance on $17,000 in theology school student loans — received agency services that would remain in effect, adding that their harms did not outweigh the government’s.
U.S. Circuit Judge Neomi Rao, a Trump appointee, seemed receptive to the Justice Department’s characterization of Jackson’s order, pressing Jennifer Bennett, of Gupta Wessler and representing the plaintiffs, what would be wrong with running the CFBP at “some minimal level.”
Bennett urged the panel to simply maintain the status quo as the case proceeds to avoid any hasty decisions that could irreversibly harm millions of Americans.
“It’ll be a very long time, given the pace of litigation in our courts,” Rao said. “It could be two years into a president’s term before he could direct an agency how to function and at what level.”
McArthur repeatedly argued that the Trump administration made clear the agency would continue to function — despite the president’s statements on the campaign trail and in the early weeks of his term — just with a more “streamlined” workforce.
He pointed to Trump’s pick to run the agency, Jonathan McKernan, who promised during his Feb. 27 confirmation hearings that the agency would “implement and enforce the federal consumer financial laws and perform each of its other statutorily assigned functions.”
Pillard expressed concern at the idea of simply “disavowing” the president’s own statements, especially considering Jackson’s finding that the government’s representations were “so disingenuous” that she could not trust the defense “to tell the truth about anything.”
During a two-day evidentiary hearing in March, the government’s primary witness, CFPB Chief Operating Officer Adam Martinez, effectively undermined a declaration he had previously filed where he said the agency was still conducing its Congressionally mandated services.
Speaking on the stand, Martinez testified that the agency would be “unrepairable” following mass terminations and stop-work orders for congressionally mandated services, which would effectively terminate up to 95% of all CFPB staff.
He described the arrival of DOGE and White House personnel at the agency as a “hostile takeover.”
U.S. Circuit Judge Gregory Katsas, a Trump appointee, also took issue with the administration’s stated desire to get rid of the agency, noting that by granting a full stay of Jackson order, the government would be free to act on that desire.
The panel suggested it may remand the case back to Jackson to further develop the record before reaching a decision on the merits.