WASHINGTON—The Trump Administration is appealing a California federal court order that required the CFPB to continue drawing operating funds from the Federal Reserve, escalating a legal battle over whether the agency can effectively be defunded without action from Congress.
The appeal follows a March ruling by U.S. District Judge Edward Davila in California, who said the Administration unlawfully refused to seek funding for the CFPB after Acting Director Russell Vought argued the agency could not access Fed funding because the central bank was operating at a loss. Davila ordered the CFPB to continue requesting money from the Fed “indefinitely,” marking the second major court rebuke of the Administration’s effort to halt the Bureau’s operations.
According to Law360, the Administration filed its appeal this week with the Ninth Circuit, arguing the lower court improperly forced the executive branch to continue funding the consumer watchdog. The CFPB’s funding structure has been at the center of repeated political and legal fights since President Donald Trump returned to office and moved aggressively to shrink the agency’s operations and staffing.
The renewed litigation comes even after the U.S. Supreme Court last year upheld the CFPB’s unique funding mechanism in a separate case, ruling Congress lawfully authorized the Bureau to receive funding directly from the Federal Reserve rather than through annual appropriations. Consumer advocates and a coalition of state attorneys general have argued the Administration’s refusal to seek funds violates federal law and threatens the agency’s ability to police consumer finance practices, including overdraft fees, predatory lending and credit reporting.