US appeals court tosses decision allowing Trump mass firings at consumer bureau

WASHINGTON, Dec 17 (Reuters) – The full bench of the federal appeals court in Washington on Wednesday tossed out an earlier decision that would have allowed President Donald Trump’s administration to resume mass firings at the U.S. Consumer Financial Protection Bureau, marking a setback for the White House.

The U.S. Circuit Court for the District of Columbia also agreed to re-hear an earlier appeal by the Trump administration against a lower court decision temporarily barring the White House from pursuing efforts to dismantle the CFPB, which Trump and other senior officials have said should be eliminated.

The administration for now remains blocked from enacting its plans to fire up to 90% of all CFPB staff. An employee union and others have battled against this in court for ten months, during which the agency has been almost completely idled.

Congress created the agency in the wake of the 2008 financial crash to police consumer financial industries whose predatory practices produced many of the toxic assets underlying that crisis.

The CFPB did not immediately respond to a request for comment. Democratic U.S. Senator Elizabeth Warren, a driving force in the agency’s creation, welcomed the decision. “The courts must follow the law, or families across the country will pay the price,” she said in a statement.

Trump and other top officials have called for the CFPB’s outright elimination, accusing it of politicized enforcement, but have also said in court they plan to maintain the agency in some form.

  In a split decision in August, the majority of a three-judge appellate panel held that a lower court had lacked jurisdiction when it ruled on worker claims of lost employment, which it said were required to follow a different process under civil service laws.

The CFPB meanwhile faces a mostly self-imposed funding crisis as top officials say they are legally barred from requesting funds for agency operations from the Federal Reserve so long as the central bank is not operating at a surplus, a position that Fed officials and some courts have rejected.

The agency has said in court its current funding, which it has not replenished this year, will be exhausted after December 31. 

(Reporting by Douglas Gillison in Washington; Editing by Daniel Wallis)