Accusing the CFPB of planning to use its funding mechanism to abolish the agency, the mayor and the city council of Baltimore (the “City of Baltimore”) and the Economic Action Maryland Fund (the “Economic Fund”), a nonprofit economic assistance organization, are asking a federal judge to keep the bureau from folding.
“The Trump administration—acting through Defendants CFPB and its Acting Director, Russell Vought—now seeks to do by fiat what opponents of the CFPB were unable to do in Congress or the courts,” the City of Baltimore and the Economic Fund, said, in a lawsuit filed in the U.S. District Court for the District of Maryland.
They further asserted that the Trump Administration is effectively defunding the agency, leaving it unable to carry out its duties under federal law.
The CFPB has said it will not draw down funds from the Federal Reserve, as it has in the past. Instead, the bureau has said it will use an agency reserve fund to fund its activities.
The plaintiffs contend that the CFPB is poised to transfer that reserve fund to the Fed, “leaving the CFPB defunded and dead in the water.”
“Without [the] CFPB, people in Baltimore would be more at risk of being tricked and trapped by shady financial practices, and the city would be forced to divert resources from other essential functions just to provide the same level of protection that residents enjoy now,” according to the City of Baltimore and the Economic Fund.
They ask the court to declare that “the defunding of the CFPB to be arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law” in violation of the Administrative Procedure Act.
And they ask for an injunction keeping the bureau from taking any action to defund the agency.
The parties in the suit have preliminarily agreed to a preliminary injunction that will keep the CFPB from transferring funds until February 28. That would allow a briefing schedule that would enable the court to rule by that date, the plaintiffs and defendants said. That agreement is pending approval by a federal judge.
Separately, the union representing CFPB employees, several other groups and a pastor have filed suit against the bureau and Acting Director Russell Vought seeking an order that would prohibit the CFPB from doing any work to stop the agency’s operations.
The groups filing the suit are the National Treasury Employees Union, the National Consumer Law Center, the NAACP, the Virginia Poverty Law Center, Pastor Eva Steege and the CFPB Employee Association.
In the suit, filed in the U.S. District Court for the District of Columbia, the plaintiffs ask the court to order the CFPB to resume all activities it is required to perform under federal law, asserting a violation of the Administrative Procedure Act and a non-statutory right to seek to enjoin and have declared unlawful agency action that is ultra vires (beyond the agency’s legal power or authority).
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