Cfpb Funding Deemed Unlawful By Trump Administration

The Trump administration declared in a court filing on Monday that the Consumer Financial Protection Bureau (CFPB)’s funding is unlawful and that the agency cannot legally request funds from the Federal Reserve under the Dodd-Frank Act.

In the filing, the administration said the CFPB is legally barred from requesting additional money from the Federal Reserve, which is typically the agency’s primary source of funding.

According to an announcement from the CFPB on Tuesday, the U.S. Department of Justice’s Office of Legal Counsel (OLC) determined that the Federal Reserve System currently has no “combined earnings” available from which the CFPB may draw funding, as required by Dodd-Frank.

The filing also explains that the CFPB is only entitled to the Fed’s surplus funds. The Fed has operated at a loss since 2022, Reuters reported.

OLC opinions are binding on executive branch agencies, including the CFPB. The decision marks another direct effort to dismantle — and potentially eradicate — the consumer watchdog agency.

The bureau said it expects to have enough funds to continue operations through at least Dec. 31, 2025.

The CFPB has faced turmoil since Feb. 1, when President Donald Trump dismissed then-Director Rohit Chopra and appointed Treasury Secretary Scott Bessent as acting director. Bessent immediately instructed staff to “stop working.”

A week later, Trump replaced Bessent with Russell Vought, and soon after nominated Jonathan McKernan to serve as the bureau’s permanent director. McKernan’s nomination did not result in confirmation, and instead he was confirmed in October as undersecretary for domestic finance at the U.S. Department of the Treasury.

Vought, as acting director, has suspended much of the agency’s work and is currently engaged in a legal battle to fire 90% of the CFPB’s staff.

Trump’s budget reconciliation bill, H.R. 1 — dubbed the One Big Beautiful Bill Act — also included measures to significantly cut funding for the bureau.