Federal Judge Blocks White House’s CFPB Defunding, Keeps Paychecks Flowing
A federal judge on Tuesday blocked the White House’s attempt to defund the Consumer Financial Protection Bureau, ensuring the agency’s employees will continue to get paid. According to AP News, the ruling matters now because funds at the CFPB were on the brink of running out.
The decision raises conflict between the executive branch and the legal limits on cutting off a federal watchdog’s funding. The Trump administration had argued that the CFPB could no longer receive funds because the Federal Reserve, from which the agency draws money, is operating at a loss.
Judge Amy Berman Jackson rejected that novel legal argument, saying the CFPB must continue to receive its funding from the Fed despite the central bank’s temporary paper losses and that the White House’s theory isn’t valid.
The CFPB has been largely hamstrung since Trump took office, with many employees barred from working while much of its mission was reversed.
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“It appears that defendants’ new understanding of ‘combined earnings’ is an unsupported and transparent attempt to starve the CFPB of funding…” Berman wrote in her opinion.
The ruling matters because it upholds a previous injunction by a court that has repeatedly blocked efforts to dismantle the agency, preserving its legal status and forcing the administration to defend its theory in open court.
A trial over whether the CFPB employees’ union can sue on the layoffs and the funding strategy is scheduled for February 2026.
What happens next…
The government will have to continue funding the CFPB under the judge’s order while the legal fight over the novel “combined earnings” claim plays out.
The decision slows but does not end the broader dispute over the bureau’s future.
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