The attorneys general of 21 states and the District of Columbia sued to block the Trump administration from refusing to request CFPB funding from the Federal Reserve, arguing the move violates the Dodd-Frank funding framework and Congress's authority. The CFPB, created after the 2008 crisis and funded through the Fed, warned its funds could run out in early 2026 because the Fed has reported losses since 2022. States say the funding cutoff would hamper consumer protection work and sharing of complaint data; separate suits by a union and nonprofits seek similar relief.
Democratic-Led Coalition Sues to Stop Trump Administration From Cutting CFPB Funding
Signage is seen at the Consumer Financial Protection Bureau (CFPB) headquarters in Washington, D.C., U.S., May 14, 2021. REUTERS/Andrew Kelly
A coalition of Democratic attorneys general from 21 states and the District of Columbia filed a federal lawsuit on Dec. 22 in Oregon seeking to block the Trump administration's decision to refuse a Federal Reserve funding request for the U.S. Consumer Financial Protection Bureau (CFPB). The states say the move is unlawful, undermines congressional authority and would cripple the bureau’s ability to protect consumers.
What the Lawsuit Says
The complaint — brought by state attorneys general led by California, Colorado, New Jersey, New York and Oregon — argues that the administration’s decision not to request CFPB funding violates the Dodd-Frank Act’s funding structure and infringes on Congress’s power of the purse under the Constitution. The states contend the refusal will prevent the CFPB from meeting statutory duties, including providing consumer-complaint data to state regulators.
Funding Dispute Explained
The CFPB, created after the 2008 financial crisis and launched in 2011, is funded directly by the Federal Reserve under the Dodd-Frank Act rather than through annual congressional appropriations. Last month the bureau, operating under Acting Director Russell Vought, said it could not request additional funds because Dodd-Frank ties CFPB financing to the Fed’s "combined earnings." Because the Federal Reserve has reported operating losses since 2022, the administration says there are no earnings available to transfer.
Practical Stakes
In a Nov. 10 court filing the CFPB said it expected its funds could be exhausted in early 2026. The states argue that a funding cutoff would harm consumers by impairing investigations, enforcement and the bureau’s ability to share complaint data with state agencies. "The administration's actions are a handout to those who drive up costs by cheating hardworking Americans, and I will keep fighting to ensure they follow the law and our Constitution," said New York Attorney General Letitia James.
Agency Disruption and Parallel Litigation
Since returning to the White House in January, President Trump has sought to dismantle the bureau and installed Budget Director Russell Vought as acting head. Legal fights over staffing and authority have tied up efforts to remove employees, but Vought has significantly scaled back the CFPB’s operations. Separately, a federal employees' union and several nonprofit groups have filed two additional suits in Washington, D.C., and California seeking court orders to compel the CFPB to resume requesting funds from the Federal Reserve.
Why it matters: The dispute tests the limits of executive control over agency funding mechanisms established by Congress and has immediate implications for consumer protections, enforcement actions and state access to complaint data.
The CFPB did not immediately respond to requests for comment. Reporting by Nate Raymond in Boston; edited by David Bario and Nia Williams.
