WASHINGTON, July 10 (Reuters) – A federal judge on Friday paused a union lawsuit seeking to block the Trump administration from shutting down the top U.S. watchdog for consumer financial protection, agreeing to resume the case after lawmakers decide on the nomination of a new director, court records showed.
The current agency leadership had said the nominee, Capital One senior executive Brian Johnson, should be allowed to decide whether to pursue mass layoffs that the administration has for more than a year been battling in court to impose on the U.S. Consumer Financial Protection Bureau, according to a court filing.
The pause pointed to a possible change of direction in the long-running legal drama as Johnson, a Republican former top CFPB official, prepares to take over from Russell Vought, President Donald Trump’s budget director and acting head of the CFPB who had publicly vowed to abolish the agency.
In an order on Friday, U.S. District Judge Amy Berman Jackson said both sides must inform her within two days should the Senate confirm Johnson as director.
In light of a revised mass layoff plan unveiled in April, a federal appeals court last month agreed to allow Berman Jackson to consider lifting the preliminary injunction she imposed last year requiring the administration not to fire CFPB workers en masse while the courts decide if this is legal. The order issued Friday pauses that process.
Under the April plan, the CFPB workforce would fall to 556 workers, less than a third of the agency’s size when Trump took office, with 80% and 85% of positions eliminated in the divisions of enforcement and supervision respectively.
Both sides now agree that if confirmed Johnson should be able to review the new layoff plan and “decide whether he would like to pursue it,” according to a joint motion that prompted Jackson’s Friday order.
Congress created the CFPB following the 2008 financial crisis to prevent predatory lending and police consumer financial industries that generated many of the toxic products underpinning the crisis.
Trump and other top officials have called for the CFPB’s outright elimination, accusing it of politicized enforcement and unduly burdening companies, something consumer advocates have rejected as an illegal giveaway to politically connected corporate actors that jeopardizes public welfare.
Vought, who took over as acting CFPB director last year, is legally required to step down at the start of August.
(Reporting by Douglas Gillison in Washington, editing by Deepa Babington)
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