CFPB Says It Is Legally Blocked From Accessing Funds

The Consumer Financial Protection Bureau (CFPB) announced it is legally blocked from accessing funds from the Federal Reserve to support its ongoing operations. This restriction is based on a legal opinion from the Trump administration which determined that the Federal Reserve is not currently reporting “combined earnings” as required under the 2010 law that created the CFPB. As a result, the CFPB cannot legally withdraw cash from the Fed. However, the bureau stated it has enough existing funding to continue operating at least through the end of 2025.

The CFPB’s funding mechanism is unique; it is directly funded by the Federal Reserve rather than receiving annual appropriations from Congress. Since President Donald Trump took office, the CFPB has refrained from accepting funding, driven by efforts from Trump and Acting Director Russell Vought to dismantle the agency. The bureau faces internal uncertainty regarding employee compensation and severance due to these funding and operational restrictions.

Courts and the Texas Attorney General have rejected arguments that the CFPB can only draw funds from the Fed’s surplus, affirming the constitutionality of the CFPB’s funding model last year. Nevertheless, a legal dispute continues surrounding the administration’s attempts to restrict the CFPB’s funding and operations, with ongoing lawsuits filed against attempts to defund or dismantle the consumer watchdog agency.

In summary, the CFPB is legally blocked from accessing new funds from the Federal Reserve under current conditions, but it expects to maintain operations with existing reserves through the end of 2025 as it navigates legal and political challenges to its funding and existence.