Trump Admin Must Seek CFPB Funds From Fed, Judge Rules (2)

The Consumer Financial Protection Bureau is required to seek funds from the Federal Reserve to perform statutory functions, a judge said in an order Tuesday clarifying an injunction that prevents the Trump administration from shuttering the agency while litigation proceeds.

Judge Amy Berman Jackson rebuffed the administration’s interpretation of its funding procedure, noting its sharp departure from the CFPB’s longstanding method of requesting funds even when the Federal Reserve is operating at a loss.

Acting Director Russell Vought’s rationale that the agency wouldn’t be able to carry out its functions in fiscal 2026 due to lack of Federal Reserve funding is based on “flawed reasoning” from the DOJ’s Office of Legal Counsel that goes against the terms the injunction Jackson entered in March, she said Tuesday.

Sen. Elizabeth Warren (D-Mass.) praised the judge’s ruling.

“A federal court rejected the Trump Administration’s most recent, ridiculous attempt to starve the Consumer Financial Protection Bureau of funding,” Warren, who pushed to create the agency in the wake of the 2008 financial crisis, said in a statement. “If courts continue to uphold the law, they’ll keep blocking Russ Vought’s illegal attempts to ‘close down’ the agency that has returned $21 billion directly to Americans who were cheated by big banks and giant corporations.”

The National Treasury Employees Union and co-plaintiffs had sought clarification of the injunction, which Jackson provided by reiterating that the Trump administration and Vought have taken steps toward shuttering the agency against Dodd-Frank Act requirements to perform key consumer watchdog functions.

“Millions of American families depend on the CFPB’s consumer protections. And Russell Vought, once again, tried to shut the agency down,” Jennifer Bennett of Gupta Wessler LLP, who represents the plaintiffs, said in a statement. “We’re very pleased that the court made clear what should have been obvious: Vought can’t justify abandoning the agency’s obligations or violating a court order by manufacturing a lack of funding.”

The CFPB didn’t immediately respond to a request for comment on the ruling.

Keeping the agency open, staffed, and running requires money that Vought has no intention of asking the Federal Reserve to provide, despite a determination by Congress that the CFPB is entitled to that funding, according to Jackson.

“One problem with this is that it is entirely inconsistent with the way the Dodd-Frank Act has been consistently interpreted by all the parties involved,” the judge said in her order. “The Court clarifies that the claimed ‘lapse’ in funding, which was manufactured by the defendants based solely on the OLC Memo, is not a valid justification for the agency’s unilateral decision to abandon its obligations under the injunction.”

The US Court of Appeals for the District of Columbia Circuit entered a ruling in August that opened the door for the administration to fire most CFPB employees, which remains on hold while NTEU and co-plaintiffs’ request to review the panel’s split decision is pending a Feb. 24 rehearing en banc.

The Fed recently began generating profits again, Jackson highlighted in a footnote, acknowledging the administration’s still-unanswered request for the central bank to weigh in on whether it has combined earnings available to fund the CFPB.

“Neither the statute, the injunction, nor the Fed’s willingness to pay has changed; the only new circumstance is the administration’s determination to eliminate an agency created by Congress with the stroke of pen, even while the matter is before the Court of Appeals,” Jackson said in the order in the US District Court for the District of Columbia.

Public Citizen Litigation Group also represents the union and its co-plaintiffs.

The case is NTEU v. Vought, D.D.C., No. 1:25-cv-00381, 12/30/25.