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Capstone thinks the Trump administration is intent on taking apart the Consumer Financial Protection Bureau (CFPB), even as the agencyconstrained by limited budgets and staffingmoves forward with a broad deregulatory rulemaking agenda beneficial to industry. As federal enforcement and supervision recede, we expect well-resourced, Democratic-led states to action in, producing a fragmented and irregular regulatory landscape.

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While the ultimate result of the litigation stays unknown, it is clear that consumer financing companies across the environment will gain from reduced federal enforcement and supervisory risks as the administration starves the agency of resources and appears committed to lowering the bureau to an agency on paper only. Since Russell Vought was named acting director of the firm, the bureau has actually faced litigation challenging numerous administrative decisions planned to shutter it.

Vought likewise cancelled numerous mission-critical contracts, issued stop-work orders, and closed CFPB offices, amongst other actions. The CFPB chapter of the National Treasury Worker Union (NTEU) instantly challenged the actions. After evidentiary hearings, Judge Amy Berman Jackson of the United States District Court for the District of Columbia issued a preliminary injunction stopping briefly the reductions in force (RIFs) and other actions, holding that the CFPB was trying to render itself functionally inoperable.

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DOJ and CFPB legal representatives acknowledged that removing the bureau would need an act of Congress which the CFPB stayed responsible for performing its statutorily required functions under the Dodd-Frank Wall Street Reform and Consumer Security Act. On August 15, 2025, the DC Circuit issued a 2-1 choice in favor of the CFPB, partly leaving Judge Berman Jackson's initial injunction that obstructed the bureau from executing mass RIFs, however staying the decision pending appeal.

En banc hearings are hardly ever given, but we expect NTEU's demand to be authorized in this instance, offered the detailed district court record, Judge Cornelia Pillard's prolonged dissent on appeal, and more recent actions that signify the Trump administration plans to functionally close the CFPB. In addition to litigating the RIFs and other administrative actions aimed at closing the firm, the Trump administration intends to develop off budget cuts included into the reconciliation expense passed in July to further starve the CFPB of resources.

Dodd-Frank insulates the CFPB from direct appropriations by Congress, instead authorizing it to demand financing directly from the Federal Reserve, with the quantity capped at a portion of the Fed's operating costs, based on an annual inflation change. The bureau's capability to bypass Congress has actually routinely stirred criticism from congressional Republicans, and, in the spirit of that ire, the reconciliation plan passed in July minimized the CFPB's funding from 12% of the Fed's operating costs to 6.5%.

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In CFPB v. Neighborhood Financial Services Association of America, offenders argued the funding technique violated the Appropriations Stipulation of the Constitution. The Trump administration makes the technical legal argument that the CFPB can not legally request financing from the Federal Reserve unless the Fed is rewarding.

The CFPB said it would run out of cash in early 2026 and could not lawfully demand funding from the Fed, pointing out a memorandum viewpoint from the DOJ's Workplace of Legal Counsel (OLC). As a result, because the Fed has been running at a loss, it does not have "integrated incomes" from which the CFPB might lawfully draw funds.

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Accordingly, in early December, the CFPB followed up on its filing by corresponding to Trump and Congress saying that the agency required roughly $280 million to continue performing its statutorily mandated functions. In our view, the new but repeating financing argument will likely be folded into the NTEU lawsuits.

Most customer finance business; home mortgage lending institutions and servicers; auto loan providers and servicers; fintechs; smaller customer reporting, financial obligation collection, remittance, and automobile financing companiesN/A We anticipate the CFPB to push strongly to implement 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 published its Spring 2025 Regulatory Program, with 24 rulemakings. The agenda follows the agency's rescission of almost 70 interpretive rules, policy statements, circulars, and advisory opinions dating back to the company's inception. The bureau released its 2025 guidance and enforcement concerns memorandum, which highlighted a shift in supervision back to depository institutions and home loan lenders, an increased focus on locations such as fraud, support for veterans and service members, and a narrower enforcement posture.

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We see the proposed rule modifications as broadly beneficial to both consumer and small-business loan providers, as they narrow potential liability and direct exposure to fair-lending scrutiny. Specifically relative to the Rohit Chopra-led CFPB throughout the Biden administration, we anticipate fair-lending guidance and enforcement to virtually disappear in 2026. A proposed guideline to narrow Equal Credit Chance Act (ECOA) policies aims to get rid of disparate impact claims and to narrow the scope of the discouragement provision that forbids financial institutions from making oral or written statements meant to prevent a customer from using for credit.

The brand-new proposal, which reporting suggests will be completed on an interim basis no behind early 2026, dramatically narrows the Biden-era guideline to leave out certain small-dollar loans from protection, reduces the threshold for what is considered a small business, and removes many information fields. The CFPB appears set to issue an updated open banking guideline in early 2026, with considerable implications for banks and other conventional banks, fintechs, and data aggregators across the consumer finance environment.

The guideline was settled in March 2024 and included tiered compliance dates based upon the size of the banks, with the largest needed to begin compliance in April 2026. The last guideline was immediately challenged in May 2024 by bank trade associations, which argued that the CFPB exceeded its statutory authority in issuing the guideline, particularly targeting the restriction on charges as illegal.

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The court provided a stay as CFPB reevaluated the guideline. In our view, the Vought-led bureau may think about allowing a "affordable charge" or a similar requirement to allow information suppliers (e.g., banks) to recover expenses connected with providing the information while also narrowing the risk that fintechs and information aggregators are priced out of the marketplace.

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We expect the CFPB to dramatically lower its supervisory reach in 2026 by completing four larger participant (LP) rules that establish CFPB supervisory jurisdiction over non-bank covered individuals in various end markets. The modifications will benefit smaller sized operators in the consumer reporting, automobile financing, consumer debt collection, and global cash transfers markets.