Trump can shrink consumer protection agency but cannot dismantle it

CNN
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A federal appeals court will allow the Trump administration to further shrink the Consumer Financial Protection Bureau but not dismantle it entirely.

The Friday evening order from the US DC Circuit Court of Appeals is a partial win for President Donald Trump, who campaigned on abolishing the bureau, which was created by Congress in the wake of the 2008 financial crisis.

It will give his political appointees wide leeway to shrink the CFPB footprint significantly. However, the order makes clear that the administration cannot trim the bureau down so much that it cannot carry out its statutory functions, leaving in place some restrictions imposed by a trial court judge that curtailed the president’s ability to fully dismantle the agency.

The circuit panel – made up of two Trump appointees and an Obama appointee – was asked by the Justice Department to pause the entire preliminary injunction issued late last month by Judge Amy Berman Jackson, an Obama appointee.

The case is among the most significant legal challenges testing a president’s unilateral powers to hobble or outright disassemble agencies created by Congress. Before Jackson issued her preliminary injunction, she held two days of evidentiary hearings – featuring witness testimony from CFPB employees – examining how Trump officials, including operatives from the Department of Government Efficiency, tried to quickly layoff the majority of its staff while freezing almost all of its work.

The challengers – federal employee unions and other organizations – argued Trump acted beyond his authority in trying to wind down the agency’s work and that his administration broke other laws with its actions.

The new emergency order from the DC Circuit scaled back Jackson’s blanket prohibitions on the administration conducting mass employee terminations at the bureau. But the circuit said such terminations could only move forward after a “particularized assessment” determined that the targeted staff were not necessary for the agency to carry out its statutory functions. The appeals court also blessed stop work orders halting CFPB activities, but only if a “particularized assessment” determined such orders would not interfere with the bureau’s ability to meet the obligations set by Congress.

Additionally, the circuit is leaving in place aspects of Jackson’s order that limited the mass cancellation of contracts and that required the preservation of certain CFPB data.

The circuit order is set to last while the appeals court does a fuller review – on an expedited timeline – of Jackson’s ruling against the administration.

However, it is possible that either side could seek appeal…