CFPB Funding Issues Seem To Be Coming To A Head

The phrase refers to a looming cash-flow and governance crisis at the Consumer Financial Protection Bureau (CFPB), not to the constitutionality of its funding structure, which the Supreme Court already upheld in 2024.​

What the Supreme Court Already Decided

• In May 2024, the Supreme Court held 7–2 that the CFPB’s funding mechanism—drawing money from the Federal Reserve rather than annual appropriations—complies with the Constitution’s Appropriations Clause.​

• That decision reversed a 2022 Fifth Circuit ruling that had found the structure unconstitutional, removing the “existential threat” that the Court might shut the agency down on separation-of-powers grounds.​

The New Problem: No “Combined Earnings”

• Under Dodd‑Frank, the CFPB can request up to a capped amount annually from the Federal Reserve’s “combined earnings,” rather than from Congress’s regular appropriations process.​

• Since 2022, the Federal Reserve has been running large operating losses, raising a technical question whether there are any “combined earnings” from which the CFPB can lawfully be funded.​

The OLC Opinion and Funding Freeze

• A new legal opinion from the Department of Justice’s Office of Legal Counsel (OLC) advises that the CFPB may not lawfully request funds from the Fed when there are no combined earnings.​

• Acting Director Russell Vought has relied on that opinion to stop requesting money from the Federal Reserve, effectively cutting off the usual funding stream despite the Supreme Court having said that structure is constitutional.​

Litigation and “Coming to a Head”

• Unions representing CFPB employees sued in federal district court in Washington, D.C., leading to an injunction that currently blocks mass layoffs and certain downsizing actions while the case proceeds.​

• Vought has now warned the court that the CFPB is rapidly running out of funds and, because of the OLC opinion, cannot ask the Fed for more; he is seeking clarification that he can reduce staff and operations without violating the injunction if the money runs out.​

Lawsuits and Push for Congressional Funding

• Separate lawsuits by nonprofits in California seek to force the CFPB to accept or request funding from the Fed, arguing that the Director’s refusal unlawfully undermines the standing appropriation Congress created.​

• At the same time, the Bureau has notified the President and Congress that it will need roughly $279–280 million in direct appropriations to continue statutory operations through the end of fiscal 2026, effectively asking to move onto the regular appropriations process if Fed-based funding remains unavailable.​

In short, “coming to a head” means the clash among the Supreme Court’s green light for the CFPB’s structure, the Fed’s lack of earnings, the OLC interpretation, Vought’s decision not to tap the Fed, and pending lawsuits and injunctions—all converging as the Bureau predicts it may run out of operating funds in early fiscal 2026 unless Congress or the courts change the situation.