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Capstone thinks the Trump administration is intent on dismantling the Consumer Financial Defense Bureau (CFPB), even as the agencyconstrained by limited spending plans and staffingmoves forward with a broad deregulatory rulemaking program favorable to market. As federal enforcement and supervision decline, we expect well-resourced, Democratic-led states to step in, developing a fragmented and irregular regulatory landscape.

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While the ultimate outcome of the lawsuits remains unknown, it is clear that customer finance business across the ecosystem will benefit from reduced federal enforcement and supervisory threats as the administration starves the agency of resources and appears devoted to reducing the bureau to a firm on paper only. Since Russell Vought was called acting director of the firm, the bureau has actually faced lawsuits challenging various administrative decisions meant to shutter it.

Vought likewise cancelled various mission-critical agreements, provided stop-work orders, and closed CFPB offices, to name a few actions. The CFPB chapter of the National Treasury Employees Union (NTEU) right away challenged the actions. After evidentiary hearings, Judge Amy Berman Jackson of the US District Court for the District of Columbia issued a preliminary injunction pausing the reductions in force (RIFs) and other actions, holding that the CFPB was attempting to render itself functionally unusable.

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DOJ and CFPB attorneys acknowledged that removing the bureau would require an act of Congress and that the CFPB remained responsible for performing its statutorily required functions under the Dodd-Frank Wall Street Reform and Customer Protection Act. On August 15, 2025, the DC Circuit issued a 2-1 decision in favor of the CFPB, partially leaving Judge Berman Jackson's initial injunction that obstructed the bureau from carrying out mass RIFs, but staying the choice pending appeal.

En banc hearings are hardly ever approved, but we anticipate NTEU's request to be authorized in this instance, offered the detailed district court record, Judge Cornelia Pillard's prolonged dissent on appeal, and more current actions that signify the Trump administration intends to functionally close the CFPB. In addition to prosecuting the RIFs and other administrative actions targeted at closing the agency, the Trump administration intends to develop off spending plan cuts incorporated into the reconciliation costs passed in July to even more starve the CFPB of resources.

Dodd-Frank insulates the CFPB from direct appropriations by Congress, rather licensing it to demand funding straight from the Federal Reserve, with the amount capped at a percentage of the Fed's business expenses, based on a yearly inflation adjustment. The bureau's ability to bypass Congress has actually regularly stirred criticism from congressional Republicans, and, in the spirit of that ire, the reconciliation bundle passed in July reduced the CFPB's funding from 12% of the Fed's operating expenditures to 6.5%.

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In CFPB v. Neighborhood Financial Solutions Association of America, offenders argued the funding method broke the Appropriations Clause of the Constitution. The Trump administration makes the technical legal argument that the CFPB can not lawfully request funding from the Federal Reserve unless the Fed is lucrative.

The technical legal argument was submitted in November in the NTEU lawsuits. The CFPB said it would lack cash in early 2026 and could not legally demand financing from the Fed, citing a memorandum viewpoint from the DOJ's Office of Legal Counsel (OLC). Utilizing the arguments made by defendants in other CFPB litigation, the OLC's memorandum opinion analyzes the Dodd-Frank law, which allows the CFPB to draw financing from the "combined earnings" of the Federal Reserve, to argue that "earnings" mean "profit" instead of "earnings." As an outcome, since the Fed has actually been performing at a loss, it does not have "integrated revenues" from which the CFPB might lawfully draw funds.

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Appropriately, in early December, the CFPB followed up on its filing by sending out letters to Trump and Congress stating that the firm needed approximately $280 million to continue performing its statutorily mandated functions. In our view, the brand-new but repeating funding argument will likely be folded into the NTEU litigation.

Most consumer finance business; home loan lending institutions and servicers; auto loan providers and servicers; fintechs; smaller customer reporting, financial obligation collection, remittance, and car finance companiesN/A We anticipate the CFPB to push strongly to carry out an ambitious deregulatory program in 2026, in tension with the Trump administration's effort to starve the company of resources.

In September 2025, the CFPB released its Spring 2025 Regulatory Program, with 24 rulemakings. The program follows the firm's rescission of almost 70 interpretive rules, policy statements, circulars, and advisory viewpoints dating back to the agency's creation. The bureau launched its 2025 supervision and enforcement priorities memorandum, which highlighted a shift in supervision back to depository institutions and home mortgage lending institutions, an increased focus on locations such as fraud, assistance for veterans and service members, and a narrower enforcement posture.

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We view the proposed guideline modifications as broadly beneficial to both customer and small-business lending institutions, as they narrow possible liability and direct exposure to fair-lending analysis. Especially relative to the Rohit Chopra-led CFPB throughout the Biden administration, we anticipate fair-lending guidance and enforcement to essentially vanish in 2026. First, a proposed guideline to narrow Equal Credit Chance Act (ECOA) regulations aims to remove diverse effect claims and to narrow the scope of the frustration provision that restricts financial institutions from making oral or written declarations intended to prevent a consumer from obtaining credit.

The new proposition, which reporting recommends will be completed on an interim basis no behind early 2026, dramatically narrows the Biden-era rule to leave out certain small-dollar loans from protection, lowers the limit for what is considered a small company, and eliminates lots of information fields. The CFPB appears set to release an updated open banking guideline in early 2026, with significant implications for banks and other standard banks, fintechs, and data aggregators across the consumer finance community.

The guideline was completed in March 2024 and consisted of tiered compliance dates based on the size of the banks, with the largest required to start compliance in April 2026. The final rule was immediately challenged in Might 2024 by bank trade associations, which argued that the CFPB surpassed its statutory authority in issuing the rule, particularly targeting the restriction on costs as unlawful.

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The court provided a stay as CFPB reassessed the guideline. In our view, the Vought-led bureau may consider allowing a "sensible fee" or a comparable standard to allow information suppliers (e.g., banks) to recover expenses associated with offering the data while likewise narrowing the risk that fintechs and information aggregators are priced out of the marketplace.

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We anticipate the CFPB to significantly minimize its supervisory reach in 2026 by finalizing 4 larger individual (LP) guidelines that establish CFPB supervisory jurisdiction over non-bank covered persons in various end markets. The modifications will benefit smaller sized operators in the consumer reporting, vehicle financing, consumer debt collection, and global cash transfers markets.