CFPB Says It’s Been Barred From Drawing Federal Reserve Funds

The U.S. Consumer Financial Protection Bureau (CFPB) continues to operate, but its days could still be numbered.

The CFPB announced Tuesday (Nov. 11) that although it’s legally prohibited from drawing additional funds from the Federal Reserve to continue its operations, current funding is expected to last through at least the end of 2025.

This announcement comes amid ongoing uncertainty over the agency’s budget and workforce and the Trump administration’s efforts to dismantle the bureau since taking charge earlier this year.

A legal opinion from the Department of Justice’s Office of Legal Counsel (OLC) handed down on Monday concluded that because the Federal Reserve is not currently reporting “combined earnings,” as defined under the Dodd-Frank Act (the statute that created the CFPB), the agency can’t lawfully access funds from the Federal Reserve.

According to a Politico report , the Federal Reserve has apparently been operating at a loss since September 2022, and therefore doesn’t have the earnings that the CFPB would be authorized to tap into under the law.

PYMNTS reported in October that balance was being restored by the Federal Reserve’s three-year process of quantitative tightening and there will be a transition to a neutral maintenance phase.

Unlike most other federal government agencies, the CFPB doesn’t rely on annual appropriations from Congress. Instead, it receives its funding directly from the Federal Reserve.

According to Reuters , federal courts and the Texas Attorney General have rejected the Trump administration’s position that the CFPB can only draw from a Federal Reserve surplus. They say that the law doesn’t explicitly mandate that limitation.

Could the CFPB end up challenging the OLC opinion in federal court? The U.S. Supreme Court upheld the constitutionality of the CFPB’s funding structure last year. But right now, being locked out of the Federal Reserve could force the agency to close unless congressional funding materializes.

Also, a federal court halted enforcement of the CFPB’s open banking rule and told it to rewrite the rule. The court cited concerns over data security, regulatory overreach and what it called unreasonable compliance deadlines.