Judge burns Russ Vought with his own words, sees right through DOJ effort to 'starve' Consumer Financial Protection Bureau 'with the stroke of pen'

A national justice chopped close to the pursuit connected Tuesday, utilizing Russell "Russ" Vought's words against him portion seeing done his reliance connected a DOJ Office of Legal Counsel (OLC) memo arsenic a mode to "starve" what's near of the Consumer Financial Protection Bureau (CFPB) funding.

Vought, the manager of the Office of Management and Budget (OMB), the acting manager of USAID, a cardinal fig successful Trump's Ukraine assistance impoundment impeachment, and a Project 2025 luminary, has been unfastened astir his intentions for the CFPB bureau helium besides heads arsenic acting manager — an bureau Congress created by statute, successful the Dodd-Frank Act, successful the aftermath of the 2008 fiscal crisis.

If determination was immoderate question astir wherever Senior U.S. District Judge Amy Berman Jackson's ruling would go, the jurist remembered for presiding implicit Roger Stone's trial provided a preview astatine the precise apical of her opinion, quoting October comments Vought made connected the Charlie Kirk Show, 1 period aft Turning Point USA co-founder Charlie Kirk was murdered portion speaking astatine Utah Valley University.

Before we get to Vought's remarks, it's worthy recapping however the lawsuit astatine manus has gotten to this point.

In February, arsenic the Trump medication sought to transportation retired wide firings and gut CFPB contracts, the National Treasury Employees Union (NTEU) filed a lawsuit, 1 which led Jackson the adjacent period to worry retired loud that the bureau could beryllium "choked retired of its precise existence" earlier she could regularisation connected the merits.

Later successful March, Jackson, a Barack Obama appointee, issued a preliminary injunction that the D.C. Circuit Court of Appeals would modify. The modification said the Trump medication could proceed with reductions successful force, oregon RIFs, provided that it made a "particularized appraisal to beryllium unnecessary to the performance" of the CFPB's statutorily mandated duties.

Roughly 1 week later, aft OMB swiftly moved to occurrence astir "90 percent" of CFPB employees, Jackson issued different injunction to halt the firings — and the D.C. Circuit, successful turn, moved to forestall the wide layoffs.

A bulk sheet consisting of President Donald Trump appointees successful August vacated Jackson's injunction for deficiency of jurisdiction, a determination the NTEU past sought to undo done a petition for a rehearing by the afloat — en banc — appellate court. As precocious arsenic Dec. 17, the D.C. Circuit granted that petition and vacated the three-judge panel's ruling.

Before the en banc rehearing was granted, the NTEU plaintiffs asked Jackson to contented a cardinal clarification, owed to a announcement Vought filed connected Nov. 10.

In that notice, Vought warned of a "Potential Lapse successful Appropriations to Pay the Expenses of the Bureau" and attached a DOJ OLC sentiment that said helium had "no statutory obligation" to question funds from the Federal Reserve erstwhile it is operating "at a loss," citing the deficiency of "combined net from which the CFPB tin draw."

The plaintiffs wanted the justice to accidental the Vought defendants "may not warrant a usurpation of the preliminary injunction by refusing to request" backing from the Fed, and now Jackson has said arsenic much.

Jackson concluded that the "flawed" memo not lone "constitutes a crisp departure from the Bureau's longstanding mentation of its statutory backing procedure," but besides is "tantamount to closing what is near of the Bureau, bringing immoderate show of statutory functions and immoderate remaining ongoing compliance with the presumption of the preliminary injunction to a halt, adjacent though the lawsuit has not yet been resolved connected the merits" — the choking retired of beingness she feared from the get-go.

"[The memo] takes the presumption that the CFPB's backing mechanics nether 12 U.S.C. § 5947(a)(1), which establishes quarterly transfers from the 'combined net of the Federal Reserve System,' is unavailable erstwhile the Federal Reserve operates astatine a loss," the justice explained. "Over the past fewer years, the Federal Reserve has raised involvement rates to combat inflation, truthful portion it has continued to gain billions of dollars, its involvement expenses person exceeded its net since 2022. Notwithstanding the information that the Federal Reserve has been consistently backing the CFPB passim that period, the OLC opined that the Federal Reserve has nary 'earnings' astatine each and cannot money the CFPB, and the CFPB Director has 'no statutory obligation' to petition funds from the Fed erstwhile it is not profitable."

Jackson emphasized Tuesday that Vought couldn't person been clearer successful October astir his intentions and what staffing astatine CFPB really looks like, realities the justice said would beryllium "foolhardy" to ignore.

"The instant question was filed due to the fact that Acting CFPB Director Vought, who is besides the Secretary of the Office of Management and Budget, has docketed a announcement informing the Court that, notwithstanding each of those protestations and orders, helium has nary volition of asking the Federal Reserve for the backing Congress determined the bureau was legally entitled to receive," Jackson said. "The reasons down this are clear."

The justice past quoted Vought's remarks connected the Charlie Kirk Show that she highlighted astatine the outset.

"We don't person anyone moving determination but our Republican appointees and a fewer vocation [employees] that are doing statutory responsibilities portion we adjacent down the bureau … We privation to enactment it retired – and we volition beryllium palmy astir apt wrong the adjacent two, 3 months," Vought said.

Calling that a "candid statement" and adding that it "would beryllium foolhardy not to instrumentality Russell Vought astatine his word," the justice stated the DOJ OLC's "new knowing of 'combined earnings'" arsenic a justification for Vought not to petition Fed funds "contravenes the preliminary injunction."

The CFPB, created by Congress, cannot beryllium eliminated by the enforcement "with the changeable of pen," the justice said, arsenic that would let the Trump medication to marque the "unilateral decision" to "starve" the bureau done an "unsupported interpretation" of the Dodd-Frank Act — and each portion an entreaty lives on.

"Neither the statute, the injunction, nor the Fed's willingness to wage has changed; the lone caller condition is the administration's determination to destruct an bureau created by Congress with the changeable of pen, adjacent portion the substance is earlier the Court of Appeals," Jackson summed up.

Colin Kalmbacher contributed to this report.