Court Orders CFPB to Seek Federal Reserve Funding Amid Shutdown Dispute

The US District Court for the District of Columbia has ruled that the Consumer Financial Protection Bureau (CFPB)’s refusal to request funding violates an existing preliminary injunction. Cooley Finsights provided an analysis of the Dec. 30, 2025 ruling in National Treasury Employees Union, et al. v. Russell Vought.

As the law firm writes, the ruling effectively requires the CFPB to request funding from the Federal Reserve—a move the CFPB has resisted as part of an effort to shutter the agency.

The court concluded that the CFPB’s decision not to seek funding conflicted with its obligation to keep operating while litigation over its future proceeds, rejecting an approach aimed at winding down its operations.

The dispute arose from a lawsuit filed by the National Treasury Employees Union and other plaintiffs against the CFPB and its acting director, Russell Vought. The plaintiffs alleged that leadership actions were designed to dismantle the agency rather than administer its statutory responsibilities.

Early in the litigation, the district court imposed a preliminary injunction requiring the CFPB to continue performing its mandated duties. Although appellate proceedings have shifted over time, the injunction remained operative while further review was pending.

The controversy intensified when the CFPB informed the court that it anticipated running out of funds and asserted it could not lawfully request additional money from the Federal Reserve. That position relied on the Department of Justice’s Office of Legal Counsel interpretation, which concluded that the CFPB can only access funds from the Federal Reserve when the Federal Reserve is operating at a profit, which wasn’t the case at that time.

The district court rejected that interpretation, finding it inconsistent with the Dodd-Frank Act’s text and historical practice. The court held that declining to request funding based on that rationale violated the injunction’s requirement that the agency continue functioning.

On February 24, the full DC Court of Appeals will rehear the case en banc.

The ruling illustrates how courts may preserve the institutional status quo during high-stakes structural litigation. It also signals judicial skepticism toward agency reliance on novel statutory interpretations to justify operational shutdowns.

The decision demonstrates the role of district courts in policing compliance with interim relief while appellate review unfolds, particularly where agency funding and statutory mandates intersect.