Judge pauses lawsuit over Trump plan to shrink consumer watchdog

A federal judge on Friday paused the lawsuit challenging Donald Trump’s plan to shrink the Consumer Financial Protection Bureau, freezing the next move in a fight that could decide whether the agency keeps enough power to police banks and lenders. Judge Amy Berman Jackson said the court should be told within two days if the Senate confirms Brian Johnson, the White House nominee to lead the bureau.

The timing matters because Johnson is being positioned as the official who could decide whether to carry out the administration’s April restructuring plan. That plan would leave the bureau with 556 employees, down from more than 1,100 earlier this spring and more than 1,700 when Trump took office, a reduction of about 618 jobs. The proposed cuts would wipe out about 80% of enforcement positions and 85% of supervision jobs, sharply narrowing the bureau’s ability to pursue cases and monitor firms before abuses spread.

The Consumer Financial Protection Bureau was created in July 2010 under the Dodd-Frank Wall Street Reform and Consumer Protection Act after the 2008 financial crisis. It was set up as an independent agency within the Federal Reserve System to enforce federal consumer financial law, and the legal fight now extends to whether the White House can effectively dismantle it without Congress.

The Trump administration has argued that the CFPB’s funding structure is unlawful and has said it will not seek additional money for the agency. That stance has raised the prospect that the bureau could run out of money, leaving complaints, investigations, enforcement actions and supervision work more vulnerable to interruption just as the White House presses its case for a smaller agency.

Johnson, of Ohio, was nominated on June 10 for a five-year term as CFPB director. He previously served as the bureau’s deputy director during Trump’s first term and now sits at the center of a power struggle over who gets to decide whether the layoffs proceed.

The underlying case, National Treasury Employees Union v. Vought, returned to Jackson in June after the D.C. Circuit Court of Appeals sent the restructuring dispute back to her while retaining jurisdiction over the appeal. The latest pause leaves the future of the bureau tied not just to the court fight, but to whether the Senate acts on a nomination that could determine how aggressively the administration can remake the consumer watchdog.