The Consumer Financial Protection Bureau (CFPB) recently published a press release stating that the Department of Justice’s Office of Legal Counsel (OLC) has determined that the Bureau may not legally request funds at this time from the Federal Reserve under Dodd-Frank.
The CFPB was initially formed following the 2008 financial crisis, though it was proposed prior to that by Senator Elizabeth Warren (D-Mass.) The 2010 Dodd–Frank Wall Street Reform and Consumer Protection Act authorized its creation, and it states that the CFPB receives its funding from the Fed’s “combined earnings.” With the Justice Department now taking the stance that “combined earnings” equal profits, it may mean that the CFPB has no means from which to pull funding, as the Fed has operated at a loss since 2022.
The CFPB has stated that it currently has enough funding to continue operating until at least the end of 2025, but as to whether it will be able to continue into 2026 remains doubtful. The Bureau has been the target of the Trump administration, which has dropped enforcement cases and, in August, terminated the majority of the staff.
The ruling on funding gives the administration a roundabout way of closing up shop for the CFPB following complaints from Senate Democrats that the administration cannot simply close agencies they don’t like.
This latest development is sure to lead to further discussion and litigation, but as of now the future of the Consumer Financial Protection Bureau seems dire.
