States File Lawsuit Against White House on Consumer Protection Agency Funding
Twenty‑one Democratic attorneys general filed a lawsuit on Monday against the Consumer Financial Protection Bureau (CFPB) and its director, Russell Vought. The suit argues that the White House’s interpretation of the CFPB’s funding, which ties its budget to the Federal Reserve’s profits, is unconstitutional. The claim is rooted in the Trump administration’s assertion that the agency can only receive funds when the Fed reports combined earnings under the Dodd‑Frank Act.
The Federal Reserve has posted losses since 2022 after sharp rate hikes, causing a mismatch between bond returns and payments to banks holding deposits. The White House says the CFPB cannot draw money from the Fed if the agency lacks “combined earnings,” a stance that would leave the bureau without operating funds by January. This interpretation relies on a specific reading of the Dodd‑Frank language that many lawmakers disagree with.
Legislators who drafted Dodd‑Frank state that the term does not require the Fed to be profitable. A separate lawsuit by the CFPB employees’ union is already challenging the same funding provision against Director Vought. The attorneys general assert that the CFPB was properly created by Congress and that its statutory duty to provide consumer‑complaint data to states cannot be abandoned without violating federal law and harming consumers. No spokesperson for Vought responded to requests for comment.