Baltimore drops lawsuit challenging efforts to defund CFPB

Yahoo

4 days ago

The city of Baltimore on Thursday voluntarily dismissed its lawsuit challenging the Trump administration's efforts to defund the Consumer Financial Protection Bureau (CFPB).
The city, which is represented by the left-leaning legal organization Democracy Forward, cited the government's position in court that it won't transfer money from its reserve fund to dismantle the independent agency as reason for dropping the case.
'Defendants have repeatedly represented that there is no mechanism by which Defendant Consumer Financial Protection Bureau can transfer away money from, or otherwise relinquish control over the money in, the Bureau Fund,' lawyer Mark Samburg wrote in the filing, provided first to The Hill.
Samburg said the city and Economic Action Maryland Fund, the other plaintiff in the lawsuit, would 'undertake further actions as appropriate' if the administration later contradicts its position.
Since February, the government has acknowledged in court filings that returning CFPB's funds to the Federal Reserve would not be possible.
Both CFPB Chief Financial Officer Ngagne Jafnar Gueye and Chief Operating Officer Adam Martinez said in declarations that they were not aware of any mechanism that would make such a transfer possible.
Martinez said in his March declaration that Gueye looked into the matter and concluded that 'there is indeed no authority or mechanism to transfer excess funds back to the Federal Reserve, to transfer excess funds to the Federal Reserve's control, or to transfer excess funds to the control of any other entity.'
'The agency has therefore not attempted to do so,' the COO said.
U.S. District Judge Matthew Maddox, who is overseeing the case, previously denied Baltimore's request for a temporary restraining order after finding that the challengers failed to prove the administration took a 'final agency action' to defund the consumer watchdog, which is mandatory for relief in claims brought under the Administrative Procedure Act (APA).
The Trump administration filed a motion to dismiss the case earlier this month.
Skye Perryman, president and CEO of Democracy Forward, called the case a 'big win for consumers.'
'Our case derailed Russ Vought's plan to defund the CFPB — an agency that has been a critical defender of American consumers,' Skye Perryman said.
Baltimore and Economic Action Maryland Fund sued the CFPB and Russell Vought, its acting director, earlier this year, claiming that by seeking to return its reserve funds to the Federal Reserve or Treasury Department they effectively sought to defund and defang the agency.
The CFPB was an early target of the Trump administration and the Department of Government Efficiency (DOGE).
In a separate lawsuit, a federal judge enjoined the administration from dismantling the CFPB. A federal appeals court then issued an order that was construed as greenlighting major cuts at the agency, but it later partially lifted that decision and has not yet ruled on the merits.
'While the administration continues its efforts to dismantle the CFPB and weaken regulations that protect people from fraud and debt traps, we are delighted that the government concedes it cannot defund the bureau by transferring money from its reserve fund,' Marceline White, executive director of Economic Action Maryland Fund, said in a statement. 'This is a win for ordinary folks and we were proud to work with Democracy Forward and the City of Baltimore to stop this effort.'
Updated at 1:28 p.m. EDT
Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.