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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 budgets and staffingmoves forward with a broad deregulatory rulemaking agenda beneficial to industry. As federal enforcement and supervision decline, we expect well-resourced, Democratic-led states to action in, producing a fragmented and uneven regulatory landscape.

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While the supreme outcome of the lawsuits stays unknown, it is clear that consumer finance business across the community will gain from lowered federal enforcement and supervisory threats as the administration starves the firm of resources and appears committed to reducing the bureau to a firm on paper just. Since Russell Vought was called acting director of the agency, the bureau has faced litigation challenging numerous administrative choices meant to shutter it.

Vought likewise cancelled many mission-critical contracts, issued stop-work orders, and closed CFPB offices, among other actions. The CFPB chapter of the National Treasury Personnel Union (NTEU) immediately challenged the actions. After evidentiary hearings, Judge Amy Berman Jackson of the US District Court for the District of Columbia released a preliminary injunction pausing the decreases 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 needed 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, partially vacating Judge Berman Jackson's preliminary injunction that obstructed the bureau from executing mass RIFs, but staying the choice pending appeal.

En banc hearings are seldom given, but we expect NTEU's demand to be authorized in this instance, given the comprehensive district court record, Judge Cornelia Pillard's lengthy dissent on appeal, and more current actions that signify the Trump administration means to functionally close the CFPB. In addition to prosecuting the RIFs and other administrative actions targeted at closing the firm, the Trump administration aims to construct off budget cuts integrated into the reconciliation bill passed in July to further starve the CFPB of resources.

Dodd-Frank insulates the CFPB from direct appropriations by Congress, instead authorizing it to request financing straight from the Federal Reserve, with the quantity topped at a portion of the Fed's business expenses, based on an annual inflation adjustment. The bureau's ability to bypass Congress has frequently stirred criticism from congressional Republicans, and, in the spirit of that ire, the reconciliation package passed in July lowered the CFPB's financing from 12% of the Fed's business expenses to 6.5%.

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In CFPB v. Community Financial Providers Association of America, offenders argued the funding approach broke the Appropriations Stipulation of the Constitution. The Trump administration makes the technical legal argument that the CFPB can not legally request funding from the Federal Reserve unless the Fed is rewarding.

The technical legal argument was filed in November in the NTEU lawsuits. The CFPB said it would lack money in early 2026 and could not legally request funding from the Fed, citing a memorandum opinion from the DOJ's Workplace of Legal Counsel (OLC). Utilizing the arguments made by offenders in other CFPB lawsuits, the OLC's memorandum opinion analyzes the Dodd-Frank law, which permits the CFPB to draw financing from the "combined revenues" of the Federal Reserve, to argue that "earnings" suggest "profit" rather than "earnings." As a result, because the Fed has actually been performing at a loss, it does not have "combined earnings" from which the CFPB might lawfully draw funds.

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Accordingly, in early December, the CFPB acted 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 however recurring financing argument will likely be folded into the NTEU litigation.

The majority of consumer financing companies; home mortgage loan providers and servicers; automobile loan providers and servicers; fintechs; smaller sized consumer reporting, debt collection, remittance, and vehicle finance companiesN/A We expect the CFPB to press aggressively to implement an ambitious deregulatory agenda in 2026, in stress 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 program follows the company's rescission of almost 70 interpretive rules, policy statements, circulars, and advisory viewpoints going back to the firm's creation. Similarly, the bureau launched its 2025 supervision and enforcement top priorities memorandum, which highlighted a shift in guidance back to depository organizations and mortgage lenders, an increased focus on areas such as fraud, assistance for veterans and service members, and a narrower enforcement posture.

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We see the proposed rule changes as broadly favorable to both customer and small-business lending institutions, as they narrow possible liability and exposure to fair-lending analysis. Especially relative to the Rohit Chopra-led CFPB throughout the Biden administration, we anticipate fair-lending supervision and enforcement to essentially disappear in 2026. Initially, a proposed rule to narrow Equal Credit Opportunity Act (ECOA) guidelines intends to remove disparate effect claims and to narrow the scope of the discouragement arrangement that prohibits creditors from making oral or written statements intended to prevent a consumer from looking for credit.

The brand-new proposal, which reporting recommends will be settled on an interim basis no behind early 2026, drastically narrows the Biden-era guideline to exclude specific small-dollar loans from protection, lowers the limit for what is considered a small company, and removes many data fields. The CFPB appears set to release an upgraded open banking guideline in early 2026, with significant ramifications for banks and other conventional banks, fintechs, and data aggregators throughout the customer financing environment.

The rule was completed in March 2024 and included tiered compliance dates based on the size of the banks, with the biggest required to begin compliance in April 2026. The final rule was immediately challenged in May 2024 by bank trade associations, which argued that the CFPB exceeded its statutory authority in releasing the guideline, specifically targeting the restriction on fees as unlawful.

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The court issued a stay as CFPB reassessed the rule. In our view, the Vought-led bureau may think about allowing a "affordable fee" or a similar requirement to enable data service providers (e.g., banks) to recover expenses connected with supplying the data while also narrowing the risk that fintechs and data aggregators are priced out of the marketplace.

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We expect the CFPB to dramatically reduce its supervisory reach in 2026 by finalizing four larger individual (LP) guidelines that develop CFPB supervisory jurisdiction over non-bank covered persons in different end markets. The changes will benefit smaller operators in the customer reporting, car finance, customer financial obligation collection, and global money transfers markets.