On Tuesday, a federal judge took a decisive stance against Russell “Russ” Vought, leveraging his own statements to critique his efforts to dismantle the financial backbone of the Consumer Financial Protection Bureau (CFPB). This strategic move by the judge highlighted Vought’s use of a Department of Justice Office of Legal Counsel (OLC) memo as a means to undermine the agency’s funding.

Russell Vought, who serves as the director of the Office of Management and Budget (OMB), has long been a key player in the Trump administration. His roles have included acting director of USAID and central involvement in the controversial Ukraine aid impoundment. Furthermore, he has been recognized as a prominent figure in the Project 2025 initiative. Vought has openly expressed his intentions for the CFPB, an agency established under the Dodd-Frank Act post-2008 financial crisis, which he also leads as acting director.

If there was any question about where Senior U.S. District Judge Amy Berman Jackson’s ruling would go, the jurist remembered for presiding over Roger Stone’s trial provided a preview at the very top of her opinion, quoting October comments Vought made on the Charlie Kirk Show, one month after Turning Point USA co-founder Charlie Kirk was murdered while speaking at Utah Valley University.

Judge Jackson immediately quotes Russ Vought’s stated intentions on the fate of the CFPB while ruling against him (court documents).

To fully grasp the current situation, it is crucial to retrace the steps leading up to this judicial confrontation. Earlier this year, in February, the Trump administration initiated efforts to significantly downsize the CFPB, prompting the National Treasury Employees Union (NTEU) to file a lawsuit. By March, Judge Jackson, expressing concern, remarked that the agency might be “choked out of its very existence” before she had the chance to rule on its merits.

In response, Judge Jackson, appointed by Barack Obama, issued a preliminary injunction, which the D.C. Circuit Court of Appeals later adjusted. This adjustment allowed the administration to proceed with reductions in force (RIFs), but only if each reduction was deemed unnecessary for the CFPB’s statutory responsibilities.

Quickly following this, OMB attempted to terminate about 90% of CFPB employees, leading Judge Jackson to issue another injunction to halt these actions. Subsequently, the D.C. Circuit intervened to stop the mass layoffs, preserving the agency’s operational capacity.

Roughly one week later, after OMB swiftly moved to fire approximately “90 percent” of CFPB employees, Jackson issued another injunction to stop the firings — and the D.C. Circuit, in turn, moved to prevent the mass layoffs.

A majority panel consisting of President Donald Trump appointees in August vacated Jackson’s injunction for lack of jurisdiction, a decision the NTEU then sought to undo through a petition for a rehearing by the full — en banc — appellate court. As recently as Dec. 17, the D.C. Circuit granted that petition and vacated the three-judge panel’s ruling.

Before the en banc rehearing was granted, the NTEU plaintiffs asked Jackson to issue a key clarification, due to a notice Vought filed on Nov. 10.

In that notice, Vought warned of a “Potential Lapse in Appropriations to Pay the Expenses of the Bureau” and attached a DOJ OLC opinion that said he had “no statutory obligation” to seek funds from the Federal Reserve when it is operating “at a loss,” citing the lack of “combined earnings from which the CFPB can draw.”

The plaintiffs wanted the judge to say the Vought defendants “may not justify a violation of the preliminary injunction by refusing to request” funding from the Fed, and now Jackson has said as much.

Jackson concluded that the “flawed” memo not only “constitutes a sharp departure from the Bureau’s longstanding interpretation of its statutory funding procedure,” but also is “tantamount to closing what is left of the Bureau, bringing any performance of statutory functions and any remaining ongoing compliance with the terms of the preliminary injunction to a halt, even though the case has not yet been resolved on the merits” — the choking out of existence she feared from the get-go.

“[The memo] takes the position that the CFPB’s funding mechanism under 12 U.S.C. § 5947(a)(1), which establishes quarterly transfers from the ‘combined earnings of the Federal Reserve System,’ is unavailable when the Federal Reserve operates at a loss,” the judge explained. “Over the last few years, the Federal Reserve has raised interest rates to combat inflation, so while it has continued to earn billions of dollars, its interest expenses have exceeded its earnings since 2022. Notwithstanding the fact that the Federal Reserve has been consistently funding the CFPB throughout that period, the OLC opined that the Federal Reserve has no ‘earnings’ at all and cannot fund the CFPB, and the CFPB Director has ‘no statutory obligation’ to request funds from the Fed when it is not profitable.”

Jackson emphasized Tuesday that Vought couldn’t have been clearer in October about his intentions and what staffing at CFPB actually looks like, realities the judge said would be “foolhardy” to ignore.

“The instant motion was filed because Acting CFPB Director Vought, who is also the Secretary of the Office of Management and Budget, has docketed a notice informing the Court that, notwithstanding all of those protestations and orders, he has no intention of asking the Federal Reserve for the funding Congress determined the agency was legally entitled to receive,” Jackson said. “The reasons behind this are clear.”

The judge then quoted Vought’s remarks on the Charlie Kirk Show that she highlighted at the outset.

“We don’t have anyone working there except our Republican appointees and a few career [employees] that are doing statutory responsibilities while we close down the agency … We want to put it out – and we will be successful probably within the next two, three months,” Vought said.

Calling that a “candid statement” and adding that it “would be foolhardy not to take Russell Vought at his word,” the judge stated the DOJ OLC’s “new understanding of ‘combined earnings’” as a justification for Vought not to request Fed funds “contravenes the preliminary injunction.”

The CFPB, created by Congress, cannot be eliminated by the executive “with the stroke of pen,” the judge said, as that would allow the Trump administration to make the “unilateral decision” to “starve” the agency through an “unsupported interpretation” of the Dodd-Frank Act — and all while an appeal lives on.

“Neither the statute, the injunction, nor the Fed’s willingness to pay has changed; the only new circumstance is the administration’s determination to eliminate an agency created by Congress with the stroke of pen, even while the matter is before the Court of Appeals,” Jackson summed up.