Federal Reserve Can Fund CFPB Under Trump Admin’s Terms

A recent court filing argues that the Federal Reserve does, in fact, have the ability to fund the Consumer Financial Protection Bureau (CFPB) even under the Trump administration’s restrictive interpretation of the law, which claims the Fed has “no combined earnings” available.​

What the new filing says

In litigation over the CFPB’s funding, advocates told the court that the Trump administration’s premise—that the Fed has no money available for the CFPB because it has operated at a loss since 2022—is “incorrect.” They contend that the Federal Reserve still has sufficient earnings that qualify under the Dodd‑Frank Act’s “combined earnings” language to fund the Bureau, even if the Fed has reported accounting losses in recent years.​

Trump administration’s position

The Trump administration, relying on a Justice Department Office of Legal Counsel (OLC) opinion, has declared that the CFPB’s current funding mechanism is illegal on the ground that “combined earnings” means profits, and that the Fed’s recent losses leave no profits from which to transfer funds. On that basis, the administration has said the CFPB can no longer lawfully request money from the Fed and must instead seek appropriations from Congress, which would likely lead to the Bureau running out of funds in 2026.​

Legal and historical backdrop

In 2024, the U.S. Supreme Court upheld the CFPB’s basic funding structure—drawing capped amounts from the Federal Reserve—as constitutional under the Appropriations Clause, rejecting earlier challenges to the mechanism itself. The current dispute is narrower: it turns not on whether Fed-based funding is constitutional, but on how to interpret “combined earnings” and whether the Fed’s present financial condition truly bars any transfers to the CFPB.​

Why this matters

If courts accept the Trump administration’s reading, the CFPB will likely have to shut down or drastically curtail operations once its existing balances are exhausted, absent new congressional funding. If courts instead accept the new filing’s argument that the Fed can fund the CFPB even under the administration’s terms, the Bureau could continue operating without immediate reliance on Congress, preserving a key consumer‑protection regulator’s independence.​