Eric Mogilnicki and Valerie Hletko offered their thoughts in a Law360 piece detailing the slate of high-stakes lawsuits that could shake up the banking landscape in the coming year.
Eric commented on National Treasury Employees Union et al. v. Vought et al., a case in which the NTEU, which represented CFPB workers, sued shortly after White House budget chief Russell Vought took over at the CFPB in February and immediately ordered a stop to ongoing work, began canceling contracts, and moved to fire almost all its staff.
The result was an injunction that, for now, has blocked Vought from ordering mass layoffs, work stoppages and certain other cuts. Although a split D.C. Circuit panel later ruled the injunction to be improper — the majority saw no final, reviewable "shutdown decision" to support it — the full court has since vacated the ruling and agreed to reconsider.
That rehearing decision, which was announced last month, will keep the injunction's prohibitions in effect as briefing gets underway, with oral argument slated for late next month. Still unresolved are key questions about the scope of judicial authority to review, constrain or direct CFPB leadership decisions, but Eric said the case may only have limited practical bite at this point.
While the injunction has frozen layoffs, Eric argued it has not prevented the Trump administration from radically reshaping the CFPB in other ways. "On the policy front," he said, "the administration has already gotten what it apparently wanted."
"The staff is demoralized and departing. Enforcement is now in reverse. Supervision is slower, and they're undoing the regulations promulgated by the prior administration," he said. "The CFPB has been transformed, and any hope that the NTEU case was going to stop that from happening has I think proven illusory," Eric noted.
Valerie commented on National Association of Industrial Bankers et al. v. Weiser, a closely watched fight over state usury limits and federal banking preemption that could be headed for another round in 2026 after the Tenth Circuit breathed new life into a Colorado law that aims to rein in high-cost lending by out-of-state banks.
The case turns on where a loan is "made" for the purposes of the opt-out and, by extension, determining what rate caps apply. The district judge read that term to cover only lending by banks physically located in Colorado, but the Tenth Circuit panel majority disagreed, holding that a loan is "made" in Colorado if either the lender or borrower is located there.
Valerie said the majority's reading was conceptually anchored in a view that Colorado has a right to protect its borrowers and that the Depository Institutions Deregulation and Monetary Control Act of 1980 (DIDMCA) opt-out was intended to empower states to reassert their rate authority.
But the dissent — which argued that federal banking law has consistently used the terms "made" and "make" to refer to the bank's act of making a loan, not borrower location — "has the better view on legislative purpose," Valerie said. "It really didn't have anything to do with borrower protection. In 1980, lending was basically an intrastate affair."
The dissent "rightly pointed out that [DIDMCA's] purpose was to create competitive parity in rates between national banks and state-chartered banks, and this reading clearly undermines that purpose and creates a patchwork of potential state law conflicts," Valerie said.
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