The Trump administration declared the Consumer Financial Protection Bureau (CFPB) to be illegally funded in a motion filed in federal court. If the court agrees, the agency could be shuttered when its cash reserves run out in early 2026, according to the filing.
The Department of Justice’s (DOJ) Office of Legal Counsel submitted an opinion to the D.C. Circuit Court of Appeals, arguing the bureau cannot draw money from the Federal Reserve because the agency is only entitled to the Fed’s surplus funds. The central bank has been operating at a loss since 2022.
For the CFPB to continue operations after its current reserves are depleted, the DOJ contended, it would have to seek new agency appropriations funding approved by Congress.
To support its contention, the DOJ’s court filing cited the Antideficiency Act, which restricts the agency’s business conduct during lapses in appropriations. The DOJ noted that the legislation generally prohibits agency leaders or their employees from “making or authorizing expenditures or obligations in excess of or in advance of appropriations unless authorized by law, and from working, even on a voluntary basis, except in very limited circumstances involving emergencies involving the safety of human life or the protection of property.”
This is not the first time the legality of the CFPB’s funding mechanism has been challenged. In May 2024, the Supreme Court issued a ruling asserting that the bureau was constitutionally funded.
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