Coalition challenges CFPB funding cuts in court

"The complaint argues that the Trump administration has misinterpreted the statute that created the CFPB, transforming a provision designed to ensure stable, independent funding into one that would exhaust the agency's resources within weeks. According to the lawsuit, Vought has used what plaintiffs describe as a manufactured funding crisis to begin winding down the bureau's operations, including transferring active litigation to other agencies and developing plans to furlough CFPB employees."

"A day before the suit was filed, the CFPB's top enforcement official, Michael Salemi, announced his resignation, citing frustration that the Trump administration is blocking nearly all agency activity. Salemi's concerns echo those of his predecessor, Cara Petersen, who resigned in June. In her resignation letter, Petersen said the Trump administration had no intention to enforce the law in any meaningful way."

"But under the law, the new complaint states, the CFPB director is required to determine the amount of funding reasonably necessary for the agency to carry out its duties and request that amount from the Federal Reserve Board, which then transfers the funds. The statute, plaintiffs argue, does not give the director the power to decline to make the request."

The complaint contends that the Trump administration misinterpreted the statute that created the CFPB, converting a provision meant to ensure stable, independent funding into one that would deplete the agency's resources within weeks. It alleges Vought manufactured a funding crisis to wind down operations, transfer active litigation, and plan employee furloughs. Since February 2025, Vought reportedly has not requested funding, leaving the CFPB reliant on reserves projected to run out in early 2026. The administration has declared CFPB funding from the Federal Reserve unlawful and officials assert the agency is legally barred from seeking additional transfers. Senior enforcement officials have resigned, citing obstruction.

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