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MortgagePoint » Your Trusted Source for Mortgage Banking and Servicing News 68 September 2025 J O U R N A L ing to request further funds from the Fed- eral Reserve System," pointing out that the CFPB acting director currently has "sole discretion" over how much funding the bureau requires to operate. "To read this unambiguous grant of discretion as a requirement that the Di- rector request the full amount of funds available from the Federal Reserve is untenable and part of a politicized campaign against President Trump's his- toric efforts to restore fiscal sanity and efficiency to the Federal Government," Paoletta wrote. "The conclusion GAO apparently seeks — that the Acting Director's decision to decline to draw down unneeded funds constituted an illegal impoundment under the ICA—is diametrically opposed to the purpose of the ICA itself." APPEALS COURT CLEARS THE WAY FOR CFPB TO RESUME LAYOFFS A ccording to reports, a federal appeals court has ruled that the Trump administration can ad- vance with mass layoffs at the Consumer Financial Protection Bureau (CFPB). The U.S. Court of Appeals for D.C. lifted a lower court's preliminary injunction, clearing the way for plans by the Trump administration to eliminate 80% of its workforce through reduc- tions-in-force (RIFs) mandates. The decision overturns a previous injunction by a lower court, which has prevented the CFPB from issuing mass RIFs since February. According to Federal News Network, the CFPB could lay off approximately 1,500 employees and reduce its staff to around 200 to carry out legally required activities. Since the inception of the CFPB 15 years ago, the agency has returned approximately $21 billion to more than 200 consumers, including working-class families, servicemembers, veterans, students, and others harmed by predatory institutions. Government Executive reports that while CFPB staffers have remained on the payroll, the Bureau has stopped conducting most investigations. Presi- dent Trump's One Big Beautiful Bill cut the CFPB's budget nearly in half. Sen. Tim Scott's markup of the bill restored somewhat of an operating budget to the CFPB, reducing it from 12% to 6.5% of the Federal Reserve System's 2009 total operating expenses, adjusted for inflation. The updated provisions would decrease the CFPB's funding cap for a savings of $2 billion, and rescind unobligated funds from the Inflation Reduction Act for green housing initiatives to the Treasury for a savings of $138 million. Another provision would take unused money from the Securities and Exchange Commission (SEC) for technology modernization and eliminate the fund permanently for a savings of $448 million. In Civil Action No. 25-0381, National Treasury Employees Union v. Russell Vought (in his official capacity as Acting Director of the Consumer Financial Protection Bureau), the National Treasury Employ- ees Union (NTEU) and other groups sued Acting CFPB Director Vought in February over the dismantling of the Bureau, arguing the effort violates the separa- tion of powers between the branches of government. NTEU represents more than 1,000 frontline employees. The decision was written by Judges Gregory Kastas and Neomi Rao, both appointees of President Trump. Judge Rao served as head of the Office of Infor- mation and Regulatory Affairs in Trump's first term, which reports to the Office of Management and Budget (OMB) led by Vought. In a dissenting opinion, Judge Corne- lia Pillard, a President Obama appointee, said Trump has the authority to run CFPB in whatever way he deems best serves the public interest. "My colleagues nonetheless vacate the preliminary injunction because they deem the decision to unilaterally abolish the CFPB not a type of agency action we are authorized to review," wrote Judge Pillard. "That constricted view of our stat- utory and equitable power contravenes statutes, precedent, and basic principles of our constitutional government. Congress created the CFPB, assigned it important missions and powers, and subjected its decisions to the strong presumption of judicial review that applies as a matter of course to the final actions of federal agencies. It is untenable to hold that same Congress meant the agency's continued existence to be a matter of unilateral and unexplained presidential edict. The no- tion that courts are powerless to prevent the President from abolishing the agen- cies of the federal government that he was elected to lead cannot be reconciled with either the constitutional separation of powers or our nation's commitment to a government of laws. I respectfully dissent from the decision vacating the district court's amply supported preliminary injunction." Rep. Maxine Waters, the top Dem- ocrat on the House Financial Services Committee, released a statement follow- ing the ruling: "I am outraged and deeply disappointed by a federal court's decision to allow the Trump regime to continue its dangerous shutdown of the Consumer Financial Protection Bureau – an agency that has returned over $21 billion to Americans who have been defrauded by bad-acting financial institutions. This ruling opens the door for the mass layoff of hundreds of dedicated civil servants who have spent their careers fighting day in and day out to protect hard-working American families from financial fraud and abuse, including servicemembers, veterans, older adults, and students. Make no mistake: this is a gift-wrapped handout to the big banks and shady predatory lenders who've spent years trying to kill the CFPB so they can continue preying on consumers without fear of consequences. And now, thanks to this ruling and this unhinged Administration, the American people will be left without a strong feder- al watchdog standing between them and financial abuse." Earlier this year, Rep. Waters led more than 200 Democrats in two amicus briefs defending the CFPB from being shut down, including one in February and another in May.