Defense and Compliance Attorneys
In Fiscal Year 2026, ending September 30, 2026, the CFPB will need $279.6 million just to maintain its activities that are required by law, Bureau Acting Director Russell Vought wrote in letters to House and Senate appropriators and President Trump.
Under Section 1017 of Dodd Frank, the CFPB may be funded only from the “combined earnings” of the Federal Reserve System (see here, here, and here; see our Podcast here). In the past, under the leadership of then-Director Rohit Chopra, the Bureau requested funds from the Fed after September 2022, when the Fed started losing money on a combined basis, and the Fed provided those funds.
Apparently, in making those requests, the CFPB took the position that “earnings” means “revenue” and not “profits.”
However, in a November 7 opinion interpreting Section 1017, the Justice Department’s Office of Legal Counsel determined that the Fed does not have ”combined earnings” because it has been losing money due to the interest rate environment and, therefore, no funds may be lawfully provided to the Bureau.
In a letter to Congressional appropriators and President Trump, Acting CFPB Director Russell Vought, wrote that, “Because the Federal Reserve currently has no profits, OLC has concluded that the Federal Reserve System has no combined earnings from which the Bureau can legally request funds at this time.”
Under the position taken in the DoJ opinion, Congress would have to appropriate funds for the Bureau during the times that the Fed is unable to provide funds.
Trump Administration officials, including Vought, have said they want to abolish the CFPB. In an October media appearance, Vought said he expects the bureau to cease operations in two or three months. In his letters to Congressional appropriators and President Trump, Vought said he expects the CFPB to run out of funds sometime during the First Quarter of Fiscal Year 2026.
In his letters, Vought does not request any funding for the Bureau. He wrote that he simply was fulfilling his responsibility under the law to inform the President and members of Congress that the Bureau is running out of money.
The National Treasury Employees Union has sued Vought and others, charging that the Administration’s plan to terminate 1,400 employees amounted to shutting down the agency, something only Congress could do. In a recent filing, the Union asserted that the Administration was using a “novel” definition of “combined earnings” to try to accomplish the same result.
A divided three-judge panel of the D.C. Circuit Court of Appeals had dissolved a lower court injunction blocking the firings, which it said the Trump Administration could resume. However, when it dissolved the injunction, the panel withheld the mandate in the case to give the plaintiffs the opportunity to file a petition for a rehearing en banc. The plaintiffs subsequently did so. The D.C. Circuit has not yet acted on the petition for a rehearing en banc.
Vought notes in his letter that the injunction requires the CFPB to operate at a budget level based on the original Dodd-Frank provision that capped the funds that the CFPB could request from the Fed at 12% of the Fed’s 2009 operating expenses, adjusted for inflation. However, the One Big Beautiful Bill reduced the cap to 6.5% of the Fed’s 2009 operating expenses. The letter indicates that the 12% and 6.5% amounts are $785 million and $466.80 million, respectively. His letter also advises that to comply with the injunction, the Bureau would need $677.5 million, in Fiscal Year 2026.
The letters were sent to President Trump, Sen. Susan Collins, R-ME, Chair of the Senate Appropriations Committee; Sen. Patty Murray, D-WA, Vice Chair of the Senate Appropriations Committee.; Rep. Thomas Cole, R-OK, Chair of the House Appropriations Committee and Rep. Rosa DeLauro, D-CT, the ranking Democrat on the House Committee.
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