Judge leans toward halting Trump CFPB actions

WASHINGTON — A federal judge said she is likely to issue a preliminary injunction against the Consumer Financial Protection Bureau’s new leadership that could prevent the Trump administration from taking actions to unwind the agency. 

Following two days of evidentiary testimony, District Court Judge Amy Berman Jackson of the U.S. District Court for the District of Columbia said that it appears that massive layoffs are still planned at the CFPB under acting Director Russell Vought. 

“I want to preserve an agency that could be revived, if necessary,” she said. “I don’t think we can have nothing. That’s what I’m leaning to, I’ve not decided.” 

It’s not clear exactly what the order would entail. The lawyers representing the government and Vought took issue with what they called the over-broadness of the proposed order from the CFPB union and other groups. 

In the second day of live testimony, an unnamed CFPB employee submitted a declaration under the pseudonym Alex Doe, as well as Matthew Pfaff, the chief of staff of the Office of Consumer Response, suggested that the large-scale reductions in force are still in the works, although they’ve been temporarily halted by the judge’s court order. 

“There’s a lot of evidence that has been introduced that the same people who were sitting in a room talking about firing are still sitting in a room talking about firing,” Berman Jackson said. 

She also said that testimony showed that the mass termination of contracts has impeded the bureau’s ability to perform the duties it’s required to do by law, and suggested that emails sent by the CFPB’s chief legal officer Mark Paoletta that instructed employees to resume so-called “statutorily  required” work without written permission weren’t sufficient to assuage her worries that those duties are being fulfilled. 

“I am concerned that there is a disconnect between the language of ‘do your statutorily required duty’ and what’s actually happening and what’s being planned,” Berman Jackson said. 

She said only Congress, not the executive branch, has the ability to entirely dismantle the agency. 

“I don’t think it’s up to the president and Mr. Vought, or even the president and the new director of the CFPB,” she said. 

“Alex Doe” said that the Office of Personnel Management held meetings with the CFPB as late as March 6 to discuss how to eliminate the bureau and layoff the majority of its staff. 

“No one has told me the plan has changed,” the CFPB employee said. 

Doe said it was their understanding that the administration was still working to eliminate the bureau — even after a joint memo from the Office of Management and Budget and the Office of Personnel Management laid out a less hectic process to lay off large numbers of civil servants. They also confirmed that the terminations were planned for Feb. 14, and that a Reduction-In-Force team was rushing to process those firings before Berman Jackson issued an order that prevented them. 

Pfaff added new details from his original declaration to the court in late February about the work being done at the bureau in the time since. 

When asked to describe the environment returning to work at the consumer response function, he quipped that “chaotic is generous.” 

“People had been out of work for three weeks, there was a lot of confusion about what was happening,” he said. “We also had a variety of challenges that developed over the last couple weeks that we needed to address.” 

At least one contract that Pfaff identified as necessary to perform statutory duties — one that shared complaints between the CFPBand other federal and state regulators — wasn’t reinstated. 

Other contracted functions, he said, had developed bugs that rendered them unusable and left the agency unable to remedy them because the contractors who worked on them had been reassigned. 

Thousands of complaints didn’t make it into the CFPB consumer complaint database in the three weeks this division wasn’t working, Pfaff said. More than 16,000 are awaiting response, he added. 

The bureau received 75 complaints about imminent foreclosures in the three week no-work period, according to Pfaff’s testimony. 

“As an employee of the bureau, we had to decide between a stop work order and deciding what urgent tasks were,” he said. 

Adam Martinez, the Chief Operating Officer of the bureau, sat for a second day of testimony. He said that the Department of Government Efficiency’s involvement in the bureau in early February felt like a “hostile takeover.” 

“It just simply was not normal and the rapidness of the way that it was occurring was overwhelming,” he said. “I now realize how much damage can be done within a couple of days to an organization.” 

He also said he was concerned about the way that contracts were canceled. 

“It was incredibly sloppy the way that it occurred,” Martinez said. “If there’s anything positive out of any of this, it’s that we have a better understanding and better inventory for the future on the devastating effects of turning off contracts.”

And while the “adults at the table” have arrived, he said — referring to OMB — and things like contract terminations are being done in a less rushed fashion and some work has been resumed, he’s not privy to information about what the OMB and Trump administration’s ultimate plan for the bureau is. 

“I don’t know what the end goal is for this team right now,” Martinez said.