A federal judge in Washington DC has delivered a significant blow to the Trump administration, ordering it to continue funding the Consumer Financial Protection Bureau (CFPB). The ruling prevents a move that critics argued was designed to dismantle the key consumer watchdog by cutting off its financial lifeline.
Judge Condemns 'Manufactured' Funding Crisis
In a detailed 32-page decision, District Judge Amy Berman Jackson rejected the administration's justification for halting funds. The CFPB's acting director, Russell Vought, had claimed the Federal Reserve could no longer finance the bureau because it was operating at a loss.
Judge Jackson dismissed this argument as a "manufactured" crisis created by the defendants. She stated the rationale relied solely on a memo from the Office of Legal Counsel and was a novel attempt to "starve" the agency. Funding has flowed seamlessly to the CFPB since its 2011 creation, she noted, even during periods after 2022 when the Fed's expenses surpassed its earnings.
A Broader Battle to Protect the Agency
This latest ruling builds on an earlier injunction Judge Jackson issued, which stopped the administration from dismantling the CFPB and carrying out mass firings. The case was brought by the National Treasury Employees Union, representing the bureau's workers.
Judge Jackson emphasised that Vought's funding argument provided "not a valid justification" for ignoring the court's existing order. She accused the administration of trying to "eliminate an agency created by Congress with the stroke of a pen" while the broader legal challenge is still pending. The US Court of Appeals for the DC Circuit is scheduled to hear the case on the attempt to dismantle the entire CFPB in February 2026.
Immediate Impact and Political Reaction
The timing of the decision was critical, coming just days before the CFPB was projected to run out of money to pay its employees. The ruling safeguards the agency's immediate operations.
Prominent Democratic Senator Elizabeth Warren, a key architect of the CFPB, praised the court's action. She highlighted that the bureau has returned $21 billion to Americans harmed by corporate malpractice. "If courts continue to uphold the law, they'll keep blocking Russ Vought's illegal attempts to 'close down' the agency," Warren stated.
The White House has not yet issued a public comment in response to the judicial order. The ruling represents a major setback for the Trump administration's stated goal of shuttering the consumer protection body.
