Understanding the Consumer Financial Protection Bureau Funding Crossroads

In an article by Alan S. Kaplinsky, John L. Culhane, Jr., and Richard J. Andreano, Jr. of Ballard Spahr, the authors outline a major budget crisis facing the Consumer Financial Protection Bureau. 

Their overview highlights a structural issue: the Bureau expects to need $279.6 million in Fiscal Year 2026 solely to carry out legally required activities, yet its statutory funding mechanism has stalled. Under Dodd-Frank Section 1017, the Bureau can only draw funds from the Federal Reserve’s “combined earnings.” 

The authors explain that previous leadership defined “earnings” as revenue rather than profit, allowing requests to continue even after the Fed started reporting net losses in 2022. That interpretation is now challenged. According to the authors, a November 7 opinion from the Department of Justice’s Office of Legal Counsel concluded that the Federal Reserve currently has no “combined earnings” because it does not generate profits. Acting CFPB Director Russell Vought has adopted this view. Vought informed congressional appropriators and President Trump that the Bureau cannot legally request funds from the Fed at this time, making direct congressional appropriations the only option when the Fed lacks profits. 

The article mentions a broader political context, including statements from Trump Administration officials expressing a desire to eliminate the Bureau. Litigation has also emerged: the National Treasury Employees Union has challenged planned terminations, arguing that the administration is effectively trying to shut down the agency. The DC Circuit is now considering a rehearing en banc petition after a divided panel dissolved a lower-court injunction. 

For compliance teams, the Bureau’s uncertain funding situation creates ambiguity around supervisory priorities, potential enforcement actions, and long-term regulatory stability. Staying attentive to congressional activity and court decisions is crucial as the future of Consumer Financial Protection Bureau funding remains uncertain.