America's leading consumer watchdog is nearing the end of its funding, and its own acting director appears determined to ensure that outcome.
The Consumer Financial Protection Bureau (CFPB), an agency credited with returning more than $21 billion (£16 billion) directly to Americans harmed by banks and corporations, now faces possible extinction after moves by the Trump administration to cut off its funding entirely. In November, Department of Justice attorneys warned that the bureau 'anticipates exhausting its currently available funds in early 2026.'
A Director Who Wants His Agency Gone
Acting CFPB Director Russell Vought has been openly clear about his intentions. During an October appearance on The Charlie Kirk Show, he stated his aim to 'put it out within the next two, three months.'
His strategy relies on a novel interpretation of the Dodd-Frank Act. The law established that the CFPB would be funded from the Federal Reserve's 'combined earnings', designed to shield the agency from political interference. Vought's Office of Legal Counsel now argues that, since the Fed's interest expenses have exceeded its earnings since 2022, there are no funds available to transfer.
However, Judge Amy Berman Jackson of the US District Court for the District of Columbia dismissed this argument on 30 December, describing it as 'flawed reasoning'.
'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,' Jackson wrote in her ruling.
The judge further noted that the funding mechanism had 'unfolded seamlessly since the Bureau was established in 2011,' adding that the administration's interpretation appeared to be 'an unsupported and transparent attempt to achieve the very end the court's injunction was put in place to prevent.'
What Consumers Stand to Lose
If you have ever filed a complaint against a financial institution, benefited from capped overdraft fees, or been protected from predatory lending practices, you have the CFPB to thank.
Since its creation, the agency has processed more than 6.8 million consumer complaints, with enforcement actions making an estimated 205 million consumer accounts eligible for relief, according to official CFPB data.
New York Attorney General Letitia James warned that defunding the bureau would severely hamper states' ability to protect residents. 'My office and attorneys general across the country rely on the CFPB for consumer complaints and other data to get justice for consumers,' she said.
22 States Fight Back
A coalition of 22 Democratic state attorneys general, led by James, sued Vought last month in an Oregon federal court to compel the CFPB to accept its legally mandated funding.
'Defunding the Consumer Financial Protection Bureau will make it harder to stop predatory lenders, scammers, and other bad actors from taking advantage of New Yorkers,' James stated.
Senator Elizabeth Warren, the architect of the CFPB, called the funding argument 'the Trump Administration's most recent, ridiculous attempt to starve the Consumer Financial Protection Bureau of funding.'
'If courts continue to uphold the law, they'll keep blocking Russ Vought's illegal attempts to close down the agency that has returned $21B (£16B) directly to Americans who were cheated by big banks and giant corporations,' Warren added.
The Clock Is Ticking
Currently, the CFPB holds approximately $711.6 million (£528.6 million) in reserves. Vought has described this balance as 'excessive', writing on X that the 'spigot, long contributing to CFPB's unaccountability, is now being turned off.'
However, Judge Jackson pointed to a 10 December amicus brief suggesting that the Federal Reserve had returned to profitability. This development could undermine even the administration's own interpretation of 'combined earnings'.
For now, the courts continue to block the dismantling efforts. But with each passing week, the countdown to a potential shutdown grows closer, risking leaving millions vulnerable to the very financial predators the bureau was created to combat.
Originally published on IBTimes UK
