NEW YORK, Aug 16, 2025 (BSS/AFP) - A US appeals court cleared the way Friday for President Donald Trump's administration to implement mass firings at a bank regulator set up after the 2008 financial crisis.

The decision sets the stage for significant staff cuts at the Consumer Financial Protection Bureau, a watchdog for banks and fintech companies that has been long targeted by congressional Republicans and far-right Trump allies.

By a 2-1 vote, the appeals court panel annulled a preliminary injunction issued by a US district court in March that had given a lifeline to agency staff. Labor unions representing CFPB workers had argued that Trump appointees' mass downsizing of CFPB effectively destroyed the agency, overstepping constitutional authority.

"We hold that the district court lacked jurisdiction to consider the claims predicated on loss of employment," said the ruling. "Accordingly, we vacate the preliminary injunction."

The ruling was backed by Judges Gregory Katsas and Neomi Rao, who were appointed to the court by Trump during his first term.

Dissenting was Judge Cornelia Pillard, appointed in 2013 by Democrat Barack Obama, who endorsed the district court's conclusion that a deep downsizing of the CFPB amounted to the destruction of the agency.

While the president holds great influence over the CFPB, the administration does not have the power to "decide that the country would benefit most if there was no Bureau at all," Pillard said, adding that only Congress has the authority to repeal the law that created the CFPB.

The CFPB was formed in the wake of the 2008 global financial crisis, and serves as a monitor over a variety of US consumer issues ranging from mortgages to credit cards to debt collection.

In February, Trump designated Russell Vought as director of the CFPB. Vought, who also leads the White House Office of Management and Budget, was a key architect of the conservative blueprint known as Project 2025, which called for the abolishment of the agency.

On Friday, Attorney General Pam Bondi cheered the appeals court ruling as clearing the way for the CFPB "to right-size itself in accordance with the law to best serve the American people."

The National Treasury Employees Union, which represents CFPB staff, decried the ruling.

"This decision could lead to widescale firings, which would result in the cessation of the Bureau's important work protecting consumers," said NTEU president Doreen Greenwald, adding that the CFPB has returned more than $21 billion to consumers since its establishment in 2011.

The union can appeal Friday's decision to the full appeals court.