Trump Administration Says CFPB May No Longer Legally Request Funds from Federal Reserve, Setting Tentative Shutdown Date of Early 2026
The Trump administration has officially determined that the Consumer Financial Protection Bureau (CFPB)’s current funding mechanism is unconstitutional and the agency may no longer request funds from the Federal Reserve. The CFPB anticipates having sufficient funding to continue operations until December 31, 2025. Barring legal developments, this sets the Bureau on track to shut down in early 2026.
The decision was filed in a court notice earlier this week in NTEU v. Vought, marking the administration’s most direct effort to shut down the Bureau. The court notice included a memo from the Justice Department’s Office of Legal Counsel (OLC) determining that the CFPB is only entitled to the Fed’s bank surpluses; since the Fed has operated at a loss for the last three years, there is no legal pool of money from which to draw funding from.
The Dodd-Frank Act requires the Fed to transfer from the “combined earnings of the Federal Reserve System” the amount the Bureau’s Director says is necessary for operation, with limitations. The Justice Department has determined that “combined earnings” refers to profits, and if “the Federal Reserve has no profits, it cannot transfer money to the CFPB.”
Democrats have warned that closing the CFPB would end oversight of the nation’s $18 trillion consumer debt market at a time when auto loans, student loans, and delinquencies on credit cards are continuously elevated. It would also stop the agency’s deregulatory work that many experts in the financial industry are seeking.
Senator Elizabeth Warren (D-Mass.), ranking member of the Senate Banking Committee, released a statement following the determination: “Donald Trump will do anything to try to kill an agency that has returned more than $21 billion to scammed Americans, but he will not do anything to lower costs for American families,” she said.
The Justice Department did not address the legality of the hundreds of millions of dollars that the Fed has transferred to the Bureau since it began reporting losses in 2022, and it did not take a stance on whether the actions that the CFPB has taken since are valid.
