Baltimore bid to halt US CFPB defunding rejected by judge
By Jonathan Stempel
(Reuters) - A federal judge in Baltimore on Friday rejected the city's effort to temporarily block the Consumer Financial Protection Bureau from emptying its reserves and returning the money to the U.S. Federal Reserve or Department of the Treasury.
U.S. District Judge Matthew Maddox said Baltimore did not deserve a preliminary injunction because it was unlikely to prove the CFPB made or acted upon a "discrete and final" decision to defund itself.
Baltimore and the nonprofit Economic Action Maryland Fund, formerly the Maryland Consumer Rights Coalition, sued on February 12 to stop CFPB Acting Director Russell Vought from starving the agency of cash and leaving it "dead in the water."
A lawyer for the plaintiffs said they are reviewing the decision. The CFPB did not immediately respond to a request for comment.
Many Republicans and business groups have long complained the CFPB has unchecked power.
Last May, the U.S. Supreme Court rejected a challenge by two payday lender trade groups to how the agency is funded.
In seeking an injunction, Baltimore cited a February 8 letter to Fed Chair Jerome Powell where Vought said the CFPB needed no money in its next funding draw.
It also cited a February 11 email where CFPB Chief Operating Officer Adam Martinez said the agency had contacted the Fed about its ability to return money.
But the judge said all Baltimore did was "challenge a disembodied and unrealized decision to drain the CFPB of its operating funds and reserves, without any evidence that such a decision has been reached at all or generated any legal consequences."
A separate lawsuit challenging Republican President Donald Trump's alleged effort to dismantle the CFPB is pending in Washington, D.C., federal court.
Senior CFPB officials have in that case expressed skepticism the agency's reserves could be returned.
Jonathan McKernan, Trump's nominee to become CFPB director, pledged at his February 27 Senate confirmation hearing to fully enforce consumer financial protection laws, while saying he wanted to "right-size" the agency and make it more accountable.
The case is Mayor and City Council of Baltimore et al v CFPB et al, U.S. District Court, District of Maryland, No. 25-00458.
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