The Trump administration has intensified its efforts to dismantle the Consumer Financial Protection Bureau (CFPB), challenging the legality of its funding structure. In a recent court filing, the administration’s attorneys stated that the CFPB is expected to run out of available funds by early 2026, a situation they argue could pave the way for the agency’s closure.
Under current law, the CFPB is prohibited from soliciting additional financial resources from the Federal Reserve, its primary funding source, according to the administration’s legal arguments. This marks a continuation of previous attempts by Trump officials to curtail the agency, including efforts to reduce its workforce significantly, which have sparked protracted legal disputes.
Since its establishment in response to the financial crisis, the CFPB has returned over $21 billion to American consumers, highlighting its role in reinforcing oversight of financial institutions. However, the Department of Justice’s Office of Legal Counsel contends that the CFPB cannot currently receive funding from the Federal Reserve, as it claims the phrase “combined earnings of the Federal Reserve System” pertains only to profits, and the Fed has been operating at a loss since 2022.
This legal stance has faced opposition from several federal judges who have previously dismissed similar arguments posited by companies attempting to evade lawsuits from the CFPB. Russell Vought, the head of the White House Office of Management and Budget, announced plans in October to close the agency, projecting that the process could take up to three months.
Democrats in the Senate have voiced their concerns over this initiative, noting that federal courts have intervened to prevent the unlawful shutdown of the agency. In a letter to Vought, they stated that his ongoing attempts to dissolve the CFPB are illegal and detrimental to American families who rely on the agency’s protections.
Meanwhile, Vought has suspended the majority of the CFPB’s operations as an appeal is underway regarding a lower court’s ruling that protects around 90% of the agency’s staff from termination. The CFPB did not provide an immediate response to inquiries about the situation.
This ongoing conflict highlights the contentious political climate surrounding consumer protection agencies and their critical role in safeguarding the interests of American consumers.