A federal appeals court set the stage for the Trump administration to resume firings at the top US consumer watchdog, ruling in a split decision that a lower court lacked jurisdiction in temporarily blocking the mass layoffs.
The ruling will not take immediate effect, the court said on Friday, to allow lawyers representing workers at the Consumer Financial Protection Bureau and consumer groups to file for a review of the case by the full circuit court of appeals for the District of Columbia.
The ruling is the latest twist in the legal battle over the fate of the CFPB, as the Trump administration has tried to fire 1,500 of the agency’s 1,700 employees. The agency has returned more than $21bn to US consumers since its founding.
Russell Vought, director of the office of management and budget and the architect of Project 2025, the rightwing blueprint drawn up ahead of Trump’s re-election, was appointed acting director of the CFPB in February.
The Trump administration has yet to nominate a permanent candidate for the director role since withdrawing its previous nominee in May.
US circuit judges Gregory Katsas and Neomi Rao, both Trump appointees, ruled in favor of the administration on Friday. The district court behind the initial decision “lacked jurisdiction to consider the claims predicated on loss of employment”, the majority wrote.
In a dissent, circuit judge Cornelia Pillard, who was appointed by Barack Obama, said the lower court had acted properly in blocking the Trump administration from eradicating the CFPB entirely as the lawsuit played out.
Pillard wrote: “It is emphatically not within the discretion of the President or his appointees to decide that the country would benefit most if there were no Bureau at all.”
Senator Elizabeth Warren, ranking member of the Senate banking, housing, and urban affairs committee who played a significant role in the creation of the CFPB, said: “Today’s divided panel decision willfully ignores the Trump administration’s unprecedented and lawless attempt to destroy an agency created by Congress that has helped millions of families across the country.”
The ruling was described as a “disgrace” by Cat Farman, president of the CFPB union. “It empowers Donald Trump to unilaterally eliminate vital public services established by Congress. Without a functioning CFPB, there is less oversight of the biggest banks, which means more fraud and less help for veterans and the elderly who are major targets for financial scams.”
Farman added: “[CFPB workers] aren’t giving up our fight to defend the rule of law from executive overreach and protect the hard-earned paychecks of working people from Wall Street greed.”
Reuters contributed reporting
