> At a Glance
> – The CFPB must keep receiving funds from the Federal Reserve.
> – Judge Amy Berman rejects the White House’s “combined earnings” argument.
> – The National Treasury Employees Union won a preliminary injunction blocking Russell Vought‘s shutdown plans.
> – Why it matters: The ruling keeps the consumer-finance agency operational and protects its employees.
In a decisive ruling, Judge Amy Berman upheld the CFPB’s funding from the Federal Reserve, rejecting the White House’s new legal theory. The decision stops Acting Director Russell Vought from shutting down the agency and preserves jobs for its employees.
Court Decision
Judge Amy Berman ruled that the CFPB must keep receiving funds from the Federal Reserve, even though the Fed has been operating at a paper loss since 2022. She found the White House’s “combined earnings” argument invalid and rejected its attempt to bypass the court’s injunction.
Judge Amy Berman wrote:
> “It appears that defendants’ new understanding of “combined earnings” is an unsupported and transparent attempt to starve the CPFB of funding and yet another attempt to achieve the very end the Court’s injunction was put in place to prevent,”
Background
The CFPB has been largely inoperable since President Trump took office nearly a year ago. Acting Director Russell Vought, Trump’s budget director, has sought to shut down the agency and lay off most of its staff.
Legal Argument
White House lawyers argued that the Federal Reserve has no “combined earnings” to fund the CFPB, citing the Fed’s paper loss. The Office of Legal Counsel memo on November 7 adopted this theory, but it has never been tested in court.
Union Fight
The National Treasury Employees Union sued Russell Vought and secured a preliminary injunction that halted the mass layoffs and furloughs. A trial on whether the union can sue Russell Vought over the layoffs is scheduled for February 2026.
Timeline of Key Events
| Date | Event |
|---|---|
| 2022 | Federal Reserve begins operating at a paper loss |
| Early November | White House lawyers send notice to court |
| February 2026 | Trial on union’s lawsuit against Russell Vought |
The ruling is the latest in a series of legal battles over the CFPB’s funding and operations, highlighting the tension between the White House and the agency’s employees.
Jennifer Bennett of Gupta Wessler LLP said:
> “We’re very pleased that the court made clear what should have been obvious: Vought can’t justify abandoning the agency’s obligations or violating a court order by manufacturing a lack of funding,”
Key Takeaways
- Judge Berman upheld CFPB funding from the Federal Reserve.
- The White House’s “combined earnings” theory was rejected.
- The union’s injunction protects the agency’s staff from shutdown.
The decision ensures the CFPB remains funded and operational, safeguarding consumer-finance protections and employee jobs.
