The Trump Administration’s Misinterpretation of CFPB Funding Sparks Lawsuit
A recent lawsuit alleges that the Trump administration has misinterpreted the statute creating the Consumer Financial Protection Bureau (CFPB), leading to a manufactured funding crisis that threatens to exhaust the agency’s resources.
The complaint claims that Acting Director Russell Vought has used this funding crisis as a justification to wind down the bureau’s operations, including transferring active litigation to other agencies and planning to furlough CFPB employees.
Since February 2025, Vought has not requested additional funding for the CFPB, relying instead on reserve funds. As a result, these reserves are projected to run out in early 2026, prompting furloughs and shutdown preparations.
Despite requests for comments, neither the CFPB nor the White House Office of Management and Budget (OMB) responded to HousingWire.
This legal action follows the Trump administration’s declaration that the CFPB’s funding from the Federal Reserve is unlawful. This move has raised concerns that the agency may be unable to fulfill its duties effectively.
Michael Salemi, the CFPB’s top enforcement official, recently resigned due to frustrations with the administration’s interference in agency activities. His departure echoes the concerns of previous officials regarding the enforcement of consumer financial protection laws.
The lawsuit argues that under the law, the CFPB director is obligated to request a sufficient amount of funding from the Federal Reserve to carry out the agency’s responsibilities. The suit contends that the director does not have the authority to refuse to make this request and that the Federal Reserve has the resources to fulfill it.
Stephanie Garlock, an attorney involved in the case, criticized Vought’s approach, stating that it could disrupt the oversight of financial institutions and harm consumers. Jesse Van Tol, president and CEO of NCRC, emphasized the importance of the CFPB’s work and warned of the negative consequences of undermining the agency’s funding.
This unlawful attempt to undermine the CFPB’s funding could have serious repercussions for financial institutions and consumers alike, highlighting the need to uphold Congressional intent and protect the agency’s ability to fulfill its mission.