DOJ Says CFPB Must Get Its Funding From Congress, or It Could Run Out by 2026

The Consumer Financial Protection Bureau expects to run out of funding in early 2026, the Trump administration wrote in a court filing this week, effectively sounding the death knell of the agency Republicans have been attempting to dismantle for years.

The Department of Justice’s Office of Legal Counsel said the CFPB cannot lawfully draw Federal Reserve funds, claiming there are no profits to take from, in a Monday night court filing.

That puts the future of the CFPB in the hands of Congress. The Office of Legal Counsel memorandum directs the agency to get additional funding through the congressional appropriations process, an outcome that seems unlikely as Republicans, who slashed CFPB funding nearly in half in their budget law, get the upper hand in shutdown negotiations. The continuing resolution currently on the table does not mention funding for the CFPB.

Already, some Democrats are calling the move illegal.

“This absurd maneuver by Russ Vought is plainly illegal, and federal judges have already rejected his fringe theory. If the courts continue to uphold the law, Vought will fail again,” Sen. Elizabeth Warren, who conceived of and helped develop the CFPB, said in a statement.

The Supreme Court, last year, upheld the funding structure of the CFPB. The agency’s funding source under law is the “combined earnings of the Federal Reserve System.” Now the Trump administration is arguing that there are no earnings to pull; the Fed’s profits have been nonexistent for the last two years after the Fed bumped up interest rates to tamp down inflation.

The Trump administration has targeted the CFPB early and repeatedly in the president’s second term. It attempted in February to stop work at the agency. The Office of Management and Budget’s director, Russell Vought, who serves as the acting director of the CFPB, has pushed reduction-in-force notices and the cancellation of contracts to support the agency’s work.

Payrolled employees have been largely idle this year amid the National Treasury Employees Union’s legal battle to preserve the agency.

The Office of Legal Counsel memo offered a new means of bringing the CFPB’s Fed funding to $0, after Vought requested no additional funds from Fed Chair Jerome Powell in February. In August, the U.S. Court of Appeals for the District of Columbia Circuit allowed for mass layoffs at the CFPB to proceed, but attorneys for the federal workers are seeking a second chance. They petitioned the court to rehear the case before all of its judges, rather than a panel, and are currently awaiting a decision.

The DOJ filing late Monday night — right before a federal holiday — caught CFPB union members off guard but far from surprised, according to a union member who spoke with NOTUS.

“I don’t think anything from Vought is at all that surprising at this point,” they said.

The union member added that the memo seemingly looks to create a situation where Vought as CFPB director does not even have the legal option to request money for the agency, a shift away from his efforts not to request that money. The move amounts to “throwing up these imaginary obstacles,” like the Trump administration did with the Supplemental Nutrition Assistance Program, they said, where the the Department of Agriculture said it had access to additional emergency funds, but did not want to touch that pot of money.

The Office of Legal Counsel’s suggestion to appeal to Congress for funding appropriations provided limited hope.

“There’s little to no prospects of Congress stepping in to fill the void here,” the union member told NOTUS.