CFPB RIF Temporarily Halted by District Court; Judge Will Determine Whether Violates Preliminary Injunction
Today, April 18, 2025, Judge Amy Berman Jackson of the D.C. District Court temporarily halted the Reduction in Force (“RIF”) of about 1,500 of the Consumer Financial Protection Bureau’s (“CFPB”) employees (which I wrote about here). The court will reportedly determine whether the RIF violated the preliminary injunction (which I wrote about here and here). The acting leadership of the CFPB had sent RIF notices on April 17th to the vast majority of the CFPB’s employees and reportedly was planning to cut off their access to the agency’s systems today. Yesterday, the plaintiffs in NTEU v. CFPB had filed an emergency motion in the District Court challenging the action, and Judge Jackson set a hearing for this morning.
It was reported that, at today’s hearing, Judge Jackson scheduled an evidentiary hearing for April 28, 2025, to analyze whether the RIF violated the preliminary injunction. Judge Jackson is also reported to have stated at today’s hearing that the RIF is “not going to happen in the meantime,” and that, “we’re not going to disburse 1,483 people into the universe and have them be unable to communicate with the agency anymore until we have determined whether that is lawful or not.”
It appears that the main issue will be whether the CFPB leadership conducted a “particularized assessment” before deciding to conduct the RIF. The court’s decision will likely hinge on what this term means. As I noted before, the D.C. Circuit’s partial stay of the District Court’s preliminary injunction does not define this term.
For its part, the acting leadership of the CFPB is attempting to show that it conducted such an assessment. The CFPB filed a declaration in court by Mark Paoletta, Chief Legal Officer of the CFPB. In the declaration, Paoletta states that he “along with two other CFPB attorneys, conducted a particularized assessment to determine which employees are unnecessary for the Bureau to perform its statutory duties,” and that this group “went line by line through each
competitive area to determine how many employees were necessary in each area.” As I suggested was the case in my recent blog, the decision making was based on the new supervision and enforcement priorities outlined in the internal April 16th memorandum (which I wrote about here). The declaration discusses the decisions for downsizing each part of the CFPB. For example, for Enforcement, Supervision, and Regulations the declaration states:
The Enforcement Division contained 248 employees. The Bureau is tasked by statute with performing some level of enforcement. In line with the Bureau’s revised 2025 Supervision and Enforcement priorities, I determined that the Enforcement Division should be significantly reduced in line with the Bureau’s new policy of focusing on tangible consumer harm and deferring to State enforcement actions. I therefore determined that 50 employees would be sufficient to allow the Bureau to perform its statutory enforcement functions.
The Supervision Division contained 487 employees. The Bureau is tasked by statute with performing some level of supervisory activity. In line with the Bureau’s revised 2025 Supervision and Enforcement priorities, I determined that both the quantity and scope of supervision matters would be significantly reduced. I therefore determined that 50 employees would be sufficient to allow the Bureau to perform its statutory supervision functions. Bureau leadership also determined to reorganize Supervision to concentrate all personnel in the Southeastern region due to proximity to headquarters and relatively lower cost of living.
The Research Monitoring and Regulations Division consisted of 230 employees. Within RMR, the Office of Service Members Affairs, § 5493(e), Office of Financial Protection for Older Americans, § 5493(g), and Office of the Private Education Loan Ombudsman, § 5535, are statutorily required. I determined that the statutory duties of each could be performed by 1 person. The Research Unit is also required by statute. § 5493(b)(1). I determined that 3 employees are sufficient to perform the statutory duties of the Research Unit. Monitoring is also required by statute. § 5512(c). I determined that 4 employees were sufficient to perform this statutory duty. I also determined that 10 employees for Regulations and 2 for the front office would be sufficient to perform these non-statutorily required functions. I thus determined that 22 employees would be sufficient for the RMR Division.
Whether the District Court considers the acting leadership’s supporting analysis for the RIF to be a “particularized assessment” remains to be seen. It goes without saying, the April 28th hearing will be an important one for the future of the agency. If the RIF is allowed to continue, it will be difficult for a future director to build the agency back up to meet more substantial policy objectives. Will good talent make career and life changes to join the CFPB in the future after this turmoil?
For the industry, keep in mind that the consumer finance statutes and regulations are still on the books, and you can be certain that many state regulatory agencies are watching this and deciding to increase their supervision and enforcement levels to be prepared to fill the potential gap left by a decimated CFPB
If you have questions or would like to discuss how these developments affect your organization, please email me at rich@garrishorn.com.
