Federal judge blocks gutting of consumer watchdog agency

WASHINGTON (CN) — A federal judge on Friday blocked the Trump administration from terminating nearly 1,500 employees of the Consumer Financial Protection Bureau at 6 p.m. ET, finding the government was clearly in violation of her and a D.C. Circuit panel’s ruling.

The National Treasury Employees Union informed the court on Thursday that 1,483 employees had received reduction-in-force notices, informing them they would be cut from computer access by the end of the day Friday.

U.S. District Judge Amy Berman Jackson ruled from the bench that the Friday deadline “isn’t happening” after she received declarations from CFPB employees describing how the terminations would eliminate nine offices that conduct congressionally mandated services, such as providing financial assistance to veterans and the elderly.

“I am deeply concerned with the scope and speed of such action,” the Barack Obama appointee said, noting that the RIF effort reportedly began just three business days following the D.C. Circuit’s order last Friday night. 

She scheduled an evidentiary hearing for April 28, where she expects to hear testimony from CFPB general counsel Mark Paoletta and Department of Government Efficiency agent Gavin Kliger.

The union described the move as “a functional work stoppage,” clearly in violation of both Jackson and the D.C. Circuit’s orders that the agency must not enforce a Feb. 10 stop-work order from White House Office of Management and Budget director and CFPB acting director Russell Vought.

Minutes before Friday’s hearing began, a CFPB employee and member of the reduction-in-force team filed a declaration under the pseudonym Alex Doe describing how agency leadership moved to issue the terminations notices as quickly as possible this past week.

Doe previously testified in the case that they were assigned the project lead of the team but had since been excluded from team meetings.

According to Doe’s declaration, other members said the new terminations would be larger than those previously planned before a Feb. 14 court order.

Further, Kliger pushed the reduction-in-force team to work 36 hours straight to send out the termination notices on Thursday, Doe said.

“Gavin was screaming at people he did not believe were working fast enough to ensure they could go out on this compressed timeline, calling them incompetent,” Doe said.

Jackson pressed CFPB Chief Operating Officer Adam Martinez — who previously testified that the arrival of DOGE and OPM personnel was like a “hostile takeover” — as to Kliger’s role.

Martinez said that Kliger was an employee of OPM rather than DOGE, and had been detailed to the CFPB.

Paoletta said in his declaration filed Friday morning that he and fellow agency leadership had conducted the required assessments, using “particularized” rather than the D.C. Circuit’s “individualized,” to determine which employees were unnecessary for the agency to continue its mandated functions.

“As part of this assessment, I and the other [two] attorneys went line by line through each competitive area to determine how many employees were necessary in each area,” Paoletta wrote.

He concluded that a “200-person agency” would be able to adequately fulfill the CFPB’s statutory duties and “better aligns with the new leadership’s proprieties and management philosophy.”

At oral arguments on April 9, a D.C. Circuit panel indicated that the administration was within its rights to pare down the agency and decide how many employees are necessary.

However, the panel specifically several remaining provisions of Jackson’s order, including a freeze on certain stop-work orders that would affect congressionally mandated agency functions, a prohibition of mass contract terminations and the continuation of the Office of Consumer Response hotline.

Jackson expressed concern Friday that the Office of Consumer Response would be “decimated” by the termination notices, considering the office would be reduced to eight people.

She said the April 28 hearing was necessary to determine whether the government had complied with her and the D.C. Circuit’s orders, suggesting that the case could proceed toward contempt hearings.

The Trump administration has seemingly flouted several court orders in Washington, and around the country, leading to possible criminal and civil contempt sanctions.

On Wednesday, Chief U.S. District Judge James Boasberg found probable cause for criminal contempt over the government’s “willful disregard” of his court orders requiring the return of two decoration flights to El Salvador last month.

Meanwhile, U.S. District Judge Trevor McFadden suggested during a Friday hearing that he could potentially impose civil contempt penalties on the White House for continuing to bar The Associated Press from Oval Office events this week despite his order.

The Trump appointee ultimately declined to grant the AP’s motion to enforce his injunction, giving the White House the opportunity to begin including the AP before finding his order had been violated.

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