Union Says Administration’s Failure To Seek Funding For CFPB Would Violate Injunction

A federal union representing Consumer Financial Protection Bureau employees is arguing in court that the Trump administration would violate an existing injunction if it lets the CFPB run out of money by refusing to request new funding from the Federal Reserve.​

What the union is saying

The National Treasury Employees Union (NTEU) has asked the federal district court in Washington, D.C., to “clarify” a preliminary injunction that protects CFPB employees and bars steps that would effectively shut down the bureau, such as mass firings or dismantling operations. The union’s new motion says the administration has told the court it plans to exhaust the CFPB’s remaining funds in early 2026 and then stop complying with the injunction, on the theory that no further lawful funding is available.​

The union argues that simply declining to request funds from the Fed is an impermissible way to sidestep the injunction, and that the court should make clear that the administration cannot justify non‑compliance by engineering a funding lapse.​

The funding dispute

Under Dodd‑Frank, the CFPB is funded through “combined earnings” of the Federal Reserve System, up to a statutory cap. The Justice Department’s Office of Legal Counsel issued a November 7 opinion interpreting “combined earnings” as net profit, concluding that because the Fed has operated at a loss since 2022, it has no earnings from which to fund the CFPB.​

The union and other plaintiffs counter that “combined earnings” means gross earnings (total revenue), not profit, and that the Fed’s earnings are more than sufficient to fund the bureau if the CFPB simply requests the money as in prior years. They contend the administration is using a “novel” statutory reading, unsupported by prior practice or case law, to manufacture a funding crisis and effectively shut down the agency without congressional action.​

Why the injunction matters

Earlier in 2025, a district court issued a preliminary injunction preventing the administration from abolishing the CFPB in practice by mass layoffs and other steps while the union’s lawsuit proceeds. Although a D.C. Circuit panel later voted to dissolve that injunction, the mandate has been withheld while the union seeks rehearing en banc, leaving key protections in place for now.​

The new motion asks the district judge to explicitly state that refusing to seek Federal Reserve funding — and letting the bureau’s balance “approach zero” — would violate the injunction’s requirement that the government maintain the CFPB as a functioning agency. The outcome could determine whether the CFPB must curtail or suspend consumer‑protection work when current funds run out in late 2025 or early 2026.​

Legal and policy stakes

The dispute raises broader questions about whether a president can effectively eliminate an independent agency by declining to fund it, even if Congress has not repealed its statute. It also comes on the heels of the Supreme Court’s 2025 ruling upholding the CFPB’s general funding structure as constitutional, which did not address this new “combined earnings” interpretation.​

Financial industry observers and legal commentators expect the controversy over CFPB funding and the injunction to move quickly through the courts, with many predicting that the issues could return to the Supreme Court if lower courts split on how far the executive branch can go in squeezing an agency’s budget.​