Today, another significant decision was issued in the ongoing battle over the fate of the Consumer Financial Protection Bureau (CFPB or Bureau). In National Treasury Employees Union (NTEU) v. Vought, the D.C. federal district court granted the plaintiffs’ motion to clarify the existing preliminary injunction and squarely rejected the Department of Justice Office of Legal Counsel’s (OLC) interpretation of the CFPB’s funding statute. In so holding, the ruling makes clear that the CFPB cannot justify noncompliance with the court’s existing preliminary injunction by declining to request funds from the Federal Reserve.
This decision follows the developments we described in our November 26 post (here). In their motion to clarify, the plaintiffs asked Judge Jackson to confirm two key points: that the Bureau may not engineer a funding “lapse” by refusing to request transfers from the Federal Reserve, and that “combined earnings” in 12 U.S.C. § 5497(a)(1) refers to the Federal Reserve System’s total earnings, rather than a net figure reduced by interest expense. Judge Jackson’s ruling agrees with the plaintiffs on both issues.
Background
Earlier this year, Judge Jackson issued a detailed preliminary injunction designed to preserve the CFPB’s existence and statutory functions while the merits of the plaintiffs’ claims are litigated. The injunction order barred work stoppages, large-scale reductions in force, and wholesale contract cancellations. It also required the Bureau to maintain its core operations, including its consumer complaint infrastructure.
Although a D.C. Circuit panel initially vacated the injunction, that decision was itself vacated when the D.C. Court of Appeals agreed to rehear the case en banc on December 17, 2025 (discussed here). The full court’s en banc order restored the earlier partial stay the D.C. Circuit originally entered in April, leaving much of Judge Jackson’s injunction in place.
Against this backdrop, DOJ filed a “Notice of Potential Lapse in Appropriations” in November, attaching a November 7 OLC opinion. The OLC memorandum concluded that because the Federal Reserve’s interest expenses have exceeded its income in recent years, the Fed currently has no “combined earnings” from which to fund the CFPB under § 5497(a)(1). DOJ’s notice told the district court that the CFPB expected to exhaust its existing balances in early 2026 and suggested that the Antideficiency Act would constrain further operations thereafter.
The plaintiffs’ motion to clarify was a direct response to this strategy.
The Court’s Clarification
Judge Jackson accepted the plaintiffs’ framing and emphasized that no modification of the injunction was necessary. In the court’s view, the obligation to secure funding is implicit in the existing order’s requirement that the Bureau continue its work. Judge Jackson further explained that while the injunction does not contain an express directive to request funds from the Federal Reserve, it does impose clear, ongoing duties that all take money to fulfill, including reinstating and retaining employees, maintaining facilities and technology, and continuing core statutory functions such as the Office of Consumer Response’s complaint system and the Private Education Loan Ombudsman.
The court treated the defendants’ characterization of a “lapse in funding” as misleadingly passive. The CFPB’s funding has not “lapsed” in the way appropriations sometimes expire. Rather, any shortfall would be “the intended result of the defendants’ own actions.” Judge Jackson found that declining to request funds from the Federal Reserve “unquestionably achieves the outcome of a work stoppage,” which the injunction expressly forbids the defendants from “reinstitut[ing] or seek[ing] to achieve … by any other means.” On that basis, Judge Jackson clarified that the decision not to seek funding “will not only affect, but will deliberately frustrate” the defendants’ obligations under the injunction and cannot be used as a defense to noncompliance.
Statutory Funding Analysis
In so holding, the court began by examining the ordinary meaning of “earnings,” relying on standard dictionary definitions that describe earnings as money that is earned, including income from investments, without inherently requiring the subtraction of all expenses. The court rejected the OLC’s reliance on secondary, technical definitions that equated “earnings” with profits as used in private business or securities contexts, particularly given the Federal Reserve’s unique role as a central bank rather than a profit‑maximizing enterprise.
A substantial portion of the opinion is devoted to interpreting the Dodd‑Frank Act’s funding language and responding to the OLC memorandum. Judge Jackson concluded that “combined earnings” in § 5497(a)(1) refers to all of the Federal Reserve System’s earnings, not a net profit metric reduced by interest expense.
Judge Jackson also stressed statutory context. Other sections of Dodd‑Frank and related financial statutes use “earnings” to mean amounts received or income from investments, while Congress has specifically used “net earnings” when it intends to refer to profits after expenses. The court pointed to the Federal Reserve Act’s “waterfall” provision, which expressly references “net earnings” in determining the disposition of Reserve Bank surplus. The omission of “net” in the CFPB’s funding provision was treated as deliberate and significant.
The court then turned to practice and history. It noted that the Federal Reserve has consistently transferred funds to the CFPB since the Bureau’s inception, including in the years since 2022 when the Fed’s interest expenses have exceeded its income. It cited prior statements by the CFPB and by Federal Reserve Chair Jerome Powell that the Fed is legally required to honor CFPB funding requests, even in periods of negative net income, and that the Fed has never refused such a request. Judge Jackson also noted that the CFPB’s current position directly contradicts the very opposite position it had taken in 2024. The Congressional Budget Office, too, has treated the funding stream as continuing notwithstanding recent Fed losses. In this light, the court determined that the OLC memo was “a sharp departure” from the statute’s plain language and from long‑standing interpretation and implementation by both the CFPB and the Fed.
Finally, Judge Jackson addressed the Antideficiency Act argument. She noted that the Supreme Court has already held that the CFPB’s funding mechanism constitutes an “appropriation[] made by law” for purposes of the Appropriations Clause. If “combined earnings” is given its ordinary meaning, as the Federal Reserve and the CFPB have consistently done in practice, there is no Antideficiency problem. Compliance with the injunction would involve only the expenditure of funds that Congress has already authorized.
Looking Ahead
This order does not resolve the underlying merits of whether and how the executive branch may dismantle a congressionally created agency like the CFPB, but it has immediate, practical consequences. So long as the injunction, as modified by the D.C. Circuit, remains in effect, the Bureau is obligated to continue operating and to seek the funding necessary to do so, and cannot invoke a self‑created “funding lapse” as justification for winding down its activities.
The ultimate legal framework will depend on how the D.C. Circuit rules in the pending en banc proceedings, which will address the scope of judicial review over efforts to shutter or dramatically curtail the Bureau’s operations.
