Baltimore bid to halt US CFPB defunding rejected by judge

By Jonathan Stempel

(Reuters) - A national justice successful Baltimore connected Friday rejected the city's effort to temporarily artifact the Consumer Financial Protection Bureau from emptying its reserves and returning the wealth to the U.S. Federal Reserve oregon Department of the Treasury.

U.S. District Judge Matthew Maddox said Baltimore did not merit a preliminary injunction due to the fact that it was improbable to beryllium the CFPB made oregon acted upon a "discrete and final" determination to defund itself.

Baltimore and the nonprofit Economic Action Maryland Fund, formerly the Maryland Consumer Rights Coalition, sued connected February 12 to halt CFPB Acting Director Russell Vought from starving the bureau of currency and leaving it "dead successful the water."

A lawyer for the plaintiffs said they are reviewing the decision. The CFPB did not instantly respond to a petition for comment.

Many Republicans and concern groups person agelong complained the CFPB has unchecked power.

Last May, the U.S. Supreme Court rejected a situation by 2 payday lender commercialized groups to however the bureau is funded.

In seeking an injunction, Baltimore cited a February 8 missive to Fed Chair Jerome Powell wherever Vought said the CFPB needed nary wealth successful its adjacent backing draw.

It besides cited a February 11 email wherever CFPB Chief Operating Officer Adam Martinez said the bureau had contacted the Fed astir its quality to instrumentality money.

But the justice said each Baltimore did was "challenge a disembodied and unrealized determination to drain the CFPB of its operating funds and reserves, without immoderate grounds that specified a determination has been reached astatine each oregon generated immoderate ineligible consequences."

A abstracted suit challenging Republican President Donald Trump's alleged effort to dismantle the CFPB is pending successful Washington, D.C., national court.

Senior CFPB officials person successful that lawsuit expressed skepticism the agency's reserves could beryllium returned.

Jonathan McKernan, Trump's nominee to go CFPB director, pledged astatine his February 27 Senate confirmation proceeding to afloat enforce user fiscal extortion laws, portion saying helium wanted to "right-size" the bureau and marque it much accountable.

The lawsuit is Mayor and City Council of Baltimore et al v CFPB et al, U.S. District Court, District of Maryland, No. 25-00458.

(Reporting by Jonathan Stempel successful New York; Editing by Richard Chang)