Federal Judge Rules CFPB Funding Cannot Lapse

A federal district court judge ruled Tuesday that funding for the Consumer Financial Protection Bureau (CFPB) cannot be allowed to lapse, dealing a setback to the Trump administration’s efforts to dismantle the agency by cutting off its primary funding source. U.S. District Judge Amy Berman Jackson held that the CFPB may continue to receive funding from the Federal Reserve, even though the central bank has operated at a loss in recent years.

The ruling rejects a legal theory advanced by the administration and the Justice Department’s Office of Legal Counsel, which argued that the CFPB could not lawfully request funds from the Federal Reserve because the Fed lacked “combined earnings” as defined under the Dodd-Frank Act. Judge Jackson found that interpretation unsupported by the statute and inconsistent with Congress’s intent to insulate the CFPB from political interference. She wrote that neither the law nor the Federal Reserve’s willingness to provide funds had changed, and that the funding dispute reflected an effort to eliminate the agency rather than a genuine statutory constraint.

The decision builds on earlier court orders blocking efforts to shutter the CFPB through mass layoffs and work stoppages. Acting CFPB Director Russell Vought had declined to request funding from the Federal Reserve this year and ordered broad operational pauses, warning that the agency would run out of money in early 2026.

The funding fight has become a central front in broader litigation over the administration’s authority to curtail independent financial regulators. With related appeals pending before the U.S. Court of Appeals for the D.C. Circuit and separate lawsuits brought by state attorneys general, the ruling ensures the CFPB will continue operating while courts weigh the legality of the administration’s actions.