U.S. Consumer Financial Protection Bureau needs funding, judge rules
A federal judge has rejected the Trump administration’s argument that it cannot secure funding for the Consumer Financial Protection Bureau.
A federal judge on Tuesday rejected President Donald Trump’s administration’s argument that the agency is legally barred from funding the U.S. Consumer Financial Protection Bureau, noting that a court order already prohibits the administration from shutting down the agency.
U.S. District Judge Amy Berman Jackson’s ruling comes as the CFPB faces an impending depletion of funding. The Trump administration has refused to provide additional funding to the CFPB since taking control of it in February.
Officials say the bank could run out of cash by early 2026. Representatives from the Trump administration and the CFPB did not respond to requests for comment.
Supporters say CFPB protects consumers
Supporters of the agency argue that without it, the public would be more exposed to predatory lending practices, fraud and other abuses. Mr. Trump and others have denounced it as politicized enforcement and called it a burden on free enterprise.
“For nearly a year, the Trump administration has been trying to water down the CFPB at the expense of ordinary Americans,” Erin Witte, director of consumer protection for the Consumer Federation of America, told USA TODAY. “In a recent attempt, the CFPB, led by President Trump, made a disingenuous attempt to claim that CFPB funding could not be solicited, an effort that was summarily rejected by a federal judge.”
The agency was established after the 2008 financial crisis to protect consumers of financial services. Last month, the agency issued an administrative legal opinion stating that under the CFPB’s governing laws, the central bank cannot seek additional funds from the Federal Reserve as long as it is losing money.
In a ruling Tuesday, Judge Berman Jackson rejected this as a results-oriented inference with no legal basis and said it violates a March injunction that blocked the government shutdown as long as the case is heard in court.
“Defendants’ new understanding of ‘total revenue’ appears to be an unsubstantiated and transparent attempt to accomplish the very purpose the court’s injunction was designed to prevent,” she wrote, adding that the administration’s “unilateral decision” to deny further funding from the CFPB is therefore a violation.
Witte added: “Mr. Jackson’s order makes it abundantly clear (again) that the CFPB must meet its obligations pursuant to Congressional orders, including maintaining a consumer complaint database, and cannot rely on this flawed argument to escape its obligations.”
“We are glad that the court is enforcing the actual law, not (CFPB Acting Director Russell) Vought’s flawed interpretation of the law,” she said.
Unlike many federal agencies, the CFPB is funded by the Federal Reserve System rather than by a budget set annually by Congress. But the CFPB could face tighter funding constraints anyway, as lawmakers reduced the CFPB’s allowable funding cap this year.
Contributed by: Reuters
