CFPB, R.I.P.

OPINION:

Sen. Elizabeth Warren must be beside herself. The Massachusetts Democrat is the mastermind behind the Consumer Financial Protection Bureau, a redundant federal fiefdom that operates beyond the reach of elected lawmakers and engages in unchecked left-wing activism.

Her dream is about to go up in a puff of smoke as the agency effectively declared bankruptcy Tuesday.

“The Department of Justice’s Office of Legal Counsel (OLC) has determined that the Bureau may not legally request funds at this time from the Federal Reserve under Dodd-Frank,” the CFPB announced. It won’t be able to keep the doors open much past Dec. 31.

This is another scalp for Russell Vought, the White House budget chief whom President Trump installed as acting CFPB director. Mr. Vought went on the warpath against his agency, initially firing 80% of the staff, tearing up most contracts and downsizing the office space.

As has become a familiar sequence of events, a government employees union and a handful of rent-seeking, liberal special interest groups ran to a Democratic-appointed federal judge demanding relief. U.S. District Judge Amy Berman Jackson was only too happy to appease members of her ideological tribe. She signed an emergency injunction blocking Mr. Vought from doing anything that might trim the $923 million agency’s activities.

Her honor commanded Mr. Vought to reinstate anyone fired and “provide them with either fully equipped office space, or permission to work remotely.” This was rather absurd because the 1700 G St. NW headquarters has been a ghost town since the COVID-19 panic.

In the opinion of the U.S. Circuit Court of Appeals for the District of Columbia, Judge Jackson’s micromanagement was unlawful. “If the plaintiffs’ theory were viable, it would become the task of the judiciary, rather than the Executive Branch, to determine what resources an agency needs to perform its broad statutory functions. Such pervasive judicial control of agency administration falls well beyond limited [Administrative Procedures Act] review,” a three-judge panel concluded in August.

Unfortunately, on the broader constitutional question, the Supreme Court last year upheld Ms. Warren’s scheme, which created an outfit largely replicating the functions of established regulators, such as the Federal Trade Commission and the Federal Deposit Insurance Corp.

Although the FTC and FDIC are fully capable of protecting consumers from unsavory business and banking practices, they must answer to Congress to receive their annual stipends. That means they must behave, but Ms. Warren wanted no barriers to regulatory excess.

She came up with the idea, which probably seemed brilliant to her at the time, to pay CFPB bills by looting the “combined earnings” of the Federal Reserve, a similarly opaque and unaccountable government institution. The Fed stopped turning a profit in 2022.

Although the CFPB has statutory duties it is required to perform, it can’t do so when the piggy bank is empty. It’s illegal for any government entity to make or authorize expenditures without an appropriation except in the case of “emergencies involving the safety of human life or the protection of property.” Nothing the financial regulator does is a matter of life and death.

Mr. Vought’s legal team must have had grins on their faces as they sent Judge Jackson a message Tuesday saying they expect the court won’t “impose obligations on the agency that would violate the Antideficiency Act.”

Combined with the closure of USAID and the prospect of terminating the Department of Education, Mr. Trump is pulling off a feat none of his predecessors could achieve. He has ended a government program.