Judge Slaps Down Trump Administration Scheme to 'Starve' Nation's Top Consumer Protection Watchdog

President Donald Trump and his administration have been openly plotting to scrap the nation's top consumer protection watchdog, but a federal judge has at least temporarily put those plans on hold.

US District Judge Amy Berman Jackson ruled on Tuesday that the US Federal Reserve must continue providing funds to the Consumer Financial Protection Bureau (CFPB), rejecting the Trump administration's claims that the nation's central bank currently lacks the "combined earnings" to fund the bureau's operations.

The administration had argued that the Federal Reserve should not be making payments to the CFPB because it has been operating at a loss since 2022, when it began a series of aggressive interest rate hikes aimed at taming inflation.

However, Jackson rejected this reasoning and accused the administration of using it as a cover to defund an agency that the president and top officials such as Russell Vought, director of the Office of Management and Budget, had long expressed a desire to abolish.

"It appears that defendants’ new understanding of 'combined earnings' is an unsupported and transparent attempt to starve the CPFB of funding," the judge wrote.

The CFPB must now be funded at least until the DC Circuit of Appeals weighs in on an ongoing lawsuit brought by the National Treasury Employees Union (NTEU) against Vought over layoffs at the agency that is scheduled for hearings in February.

The NTEU took a victory lap in the wake of the ruling and taunted Vought for his defeat.

"Yet another loss for Rusty Vought," the union posted on Bluesky. "Wonder how much longer Donald is going to put up with this?"

While it will continue to receive funding for the time being, the CFPB has still seen its ability to fulfill its mission severely diminished during Trump's second term.

A Tuesday report from Reuters claimed that the CFPB is "on the brink of collapse" given that the Trump administration, congressional Republicans, and industry lawsuits have "undone a decade's worth of CFPB rules on matters ranging from medical debt and student loans to credit card late fees, overdraft charges and mortgage lending."

The report also noted that, during Trump's second term, the CFPB has "dropped or paused its probes and enforcement actions, and stopped supervising the consumer finance industries, leading to a string of resignations" at the agency.

Sen. Elizabeth Warren (D-Mass.), who first drew up plans to create the CFPB in the wake of the 2008 global financial crisis, explained the agency's importance in an interview with Reuters.

"I was stunned by the number of people in financial trouble who had lost a job or got sick but who had also been cheated by one or more of their creditors," she said. "For no agency was consumer protection a first priority, it was somewhere between fifth and 10th, which meant there was just no cop on the beat. If the CFPB is not there, people have nowhere to turn when they get cheated."