Is The CFPB Headed For A Shutdown In The Wake Of DOJ Action?

The Consumer Financial Protection Bureau (CFPB) is facing a likely shutdown in early 2026 as a result of recent actions by the Department of Justice (DOJ) and a legal decision concerning its funding mechanism. The DOJ’s Office of Legal Counsel concluded that the CFPB can no longer legally receive its statutory funding from the Federal Reserve System’s “combined earnings,” as the Fed has been operating at a loss since 2022, rendering the available funds effectively zero.​

DOJ Legal Decision and Its Impact

The DOJ’s formal opinion stated that the CFPB’s unique funding method—quarterly transfers from the Fed’s earnings, as established by the Dodd-Frank Act—has become unavailable while the Fed reports losses. This prompted the CFPB to declare in court filings that it expects to exhaust its cash reserves and current funding in early 2026 unless Congress intervenes with direct appropriations, which is considered unlikely in the present political climate. The agency expects to continue minimal operations through December 31, 2025, under existing court injunctions, but faces potential layoffs and curtailment of functions after that date.​

Political and Legal Battle

The funding dispute is part of a broader conflict over the CFPB’s structure and independence, with the current Trump administration supporting efforts to shut down or restructure the agency. Acting CFPB Director Russell Vought has indicated plans to close the agency within the next few months, having already dismissed most pending enforcement cases and begun layoffs. Employee unions and consumer groups have challenged these moves in court, arguing that dissolution of the agency must be an act of Congress, not an administrative measure.​

Risks and Protections

Shutting down the CFPB risks leaving significant gaps in federal consumer protections, as the agency has replaced earlier programs at other regulators. Industry observers warn that halting operations without a replacement plan could expose consumers to increased risks in financial products and services.​

In summary, because of a DOJ legal opinion and ongoing Federal Reserve losses, the CFPB’s funding pipeline has been blocked. The CFPB is expected to keep operating until the end of 2025 but faces shutdown in early 2026 unless lawmakers act to restore funding.​