Defense and Compliance Attorneys
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The Justice Department is pressing Federal Reserve Chair Jerome Powell to clarify whether the Fed is now generating profits, a fact that could undercut the legal basis the Trump administration is using to block funding for the Consumer Financial Protection Bureau (CFPB). The answer matters because the CFPB warns it could run out of money and face furloughs in early 2026 if it cannot draw additional funds from the Fed. 
What DOJ is asking Powell
DOJ Assistant Attorney General Brett Shumate sent Powell a letter asking him to confirm whether the Federal Reserve System currently has, or soon will have, “combined earnings” or profits under the administration’s definition. DOJ points to reports that the Fed may be returning to profitability and wants Powell to say if that is true and whether such profitability will persist in the near term.
Why this matters for CFPB funding
In November, DOJ’s Office of Legal Counsel (OLC) concluded that because the Fed has been running losses, it has no “combined earnings” from which the CFPB can lawfully draw funds under Dodd‑Frank’s dedicated funding mechanism. Acting CFPB Director Russell Vought has relied on that opinion to refuse to request additional funding from the Fed, and DOJ has told courts that, as a result, the CFPB must instead look to Congress for money.
The emerging funding crisis
DOJ has warned a federal court that the CFPB expects to exhaust its currently available funds in early 2026, which could trigger furloughs for much of the staff absent new funding. Labor unions and nonprofit plaintiffs are suing, arguing there is no legal barrier to the CFPB requesting funds from the Fed and asking courts to compel the bureau to do so.
Interaction with Supreme Court ruling
The Supreme Court in May 2024 upheld the CFPB’s basic funding structure as constitutional under the Appropriations Clause, confirming that Congress’s Dodd‑Frank framework allowing the bureau to draw up to a capped share of Fed expenses is lawful. The current dispute is therefore not over constitutional design but over DOJ’s statutory reading that the CFPB cannot tap that mechanism when the Fed reports no profits, a reading that Powell’s answer on Fed earnings could either reinforce or undermine.
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