Federal judge orders halt to Trump administration efforts to dismantle consumer agency

By Douglas Gillison

WASHINGTON (Reuters) -A U.S. judge on Friday blocked the Trump administration and Elon Musk's Department of Government Efficiency from pursuing efforts to dismantle the Consumer Financial Protection Bureau, the latest rebuke from the courts in the White House's efforts to remake the federal government virtually overnight.

U.S. District Judge Amy Berman Jackson granted requests by lawyers representing a workers union and other consumer advocates who had sued the Trump administration to reverse the agency's sudden shutdown last month. The shutdown resulted in mass dismissals, contract terminations, office closures and an agency-wide work stoppage.

Representatives for the agency for the White House did not respond to requests for comment.

Democratic Senator Elizabeth Warren, who helped create the agency in response to the financial crisis, and an employee union that had brought suit hailed the decision.

The agency had been "within hours of firing nearly its entire staff," Deepak Gupta, an attorney representing CFPB workers, said in a statement. "We're heartened by the decision and look forward to continuing to press our case in court." 

After firing the agency's director last month, President Donald Trump told reporters that the agency should be eliminated. Musk had posted "CFPB RIP" on his social media platform X on the day DOGE workers gained access to the CFPB's headquarters.

However, after the lawsuit began, agency officials backtracked from some of their positions, maintaining in court that they did not intend to eliminate the agency and directing staff to resume some work, creating confusion among employees.

"If the defendants are not enjoined, they will eliminate the agency before the court has the opportunity to decide whether the law permits them to do it, and as the defendants' own witness warned, the harm will be irreparable," Berman Jackson wrote.

In sometimes withering language, she rejected key evidence Justice Department lawyers had presented, calling some claims "a charade for the court's benefit."

Mark Paoletta, the CFPB's top legal officer, "insults the reader's intelligence when he feigns surprise" that few CFPB employees were working, she wrote.

She also said that after being contradicted by sworn statements undermining the administration's position, the agency's chief operating officer, Adam Martinez, had appeared on the witness stand torn between the "loyalties to his new employers and the truth playing out on his face."

Paoletta and Martinez did not respond to emails seeking comment.

Berman Jackson ordered the CFPB not to delete any data, to reinstate fired workers and to allow work to resume, among other directions.

(Reporting by Douglas Gillison; editing by Pete Schroeder, Alistair Bell and Leslie Adler)