These judges are trying to determine the extent to which they can order the Trump administration to operate the CFPB, Reuters reported Friday (May 16), following a hearing on the matter.
The administration has, since Trump took office, tried to shrink the CFPB, if not close it down. The court is considering a government appeal to reverse a lower court ruling from March temporarily stopping plans to fire virtually all workers at the bureau.
Attorneys for a workers’ union had sued the White House in February to block efforts to shutter the CFPB, seeking the court’s help in stopping the administration from ordering bureau employees not to perform work required by law.
According to Reuters, it wasn’t clear from their questions in court how the judges might rule. However, the outcome of this appeal is likely to determine the future of the CFPB.
In court Friday, Deputy Assistant Attorney General Eric McArthur told the panel that, although the administration planned to keep the CFPB operating in some fashion as required by law, it was within the government’s purview “to radically downsize this agency, to strip it down, as it were, to the statutory studs.”
“That is a lawful policy,” he added, and “not for the courts to review.”
As Reuters noteds, the appeals court has thus far differed somewhat with the White House’s plans for the CFPB. After finding that the lower court’s injunction went too far, and allowing targeted staff dismissals, the judges then reversed course after the CFPB again attempted mass layoffs in April.
Jennifer Bennett, an attorney for a CFPB union and consumer advocacy organizations, rejected the government’s contentions that officials had not made a final decision to shutter the bureau and thus the matter could not be reviewed under laws controlling government actions.
Bennett cited emails and testimony she said showed the White House had decided to close down the CFPB. In one case, the government told employees to get back to work, while also issuing text messages with the opposite instruction. That effort was ultimately halted in court.
Despite all these potential regulatory shifts, it’s important for FinTech companies to uphold robust compliance standards, QED Investors’ Amias Gerety — an Obama administration Treasury official — told PYMNTS in an interview earlier this year.
“Even as the compliance obligations may be lessened, that actually puts more pressure on you to be operating in good faith relative to your consumers,” Gerety said. “We’re telling people it’s a little bit easier on compliance, but harder on risk.”
