Judge denies CFPB funding relief to Baltimore

A federal judge on Friday handed the Trump administration a win by declining to temporarily block its bid to strip the Consumer Financial Protection Bureau (CFPB) of its reserve funds, after Baltimore sued over an apparent effort to defund the agency.

U.S. District Judge Matthew Maddox declined to grant Baltimore's request for a temporary injunction, finding the challengers failed to prove the administration took a "final agency action" to defund the consumer watchdog.

Such a finding is mandatory for relief in claims brought under the Administrative Procedure Act (APA).

The decision notches a victory for Trump, whose efforts to cut spending across the government in alignment with his agenda have often faced roadblocks in the courts.

"For the Court to intervene and entangle itself in the Bureau’s administrative processes before the agency has made any final decision about the disposition of its operating and reserve funds — and without clear indication that an unlawful and injurious decision will be made imminently — would exceed the bounds of the Court’s proper role and jurisdiction," Maddox wrote in a 35-page ruling.

"It would be especially improper for the Court to risk exceeding its limited role on a preliminary basis," added the judge, an appointee of former President Biden.

Baltimore and Economic Action Maryland Fund sued the CFPB and its acting director, Russell Vought, last month, claiming that by seeking to return its reserve funds to the Federal Reserve or Treasury Department, they effectively sought to defund and defang the agency.

Mark Samburg, a lawyer for the plaintiffs, argued in the initial complaint that the administration sought to abolish the agency “by fiat” after legislation and legal challenges failed.

"Defendants have already announced their intention not to draw additional funds for the CFPB, claiming that the agency’s existing operating reserves are sufficient," he wrote. "Now Defendants are poised to transfer away those operating reserves, leaving the CFPB defunded and dead in the water."

A letter from Vought to the Federal Reserve, made public in court filings, showed the agency head requesting $0 for the fiscal year's third quarter.

"The Bureau’s current funds are more than sufficient—and are, in fact, excessive—to carry out its authorities in a manner that is consistent with the public interest," Vought said.

In a hearing Monday in a separate lawsuit over the CFPB's apparent dismantling, the agency's chief operating officer, Adam Martinez, testified that agency leaders probed the issue of returning funds and learned it is "virtually impossible to do that."

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