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Capstone thinks the Trump administration is intent on dismantling the Customer Financial Defense Bureau (CFPB), even as the agencyconstrained by restricted budget plans and staffingmoves forward with a broad deregulatory rulemaking program beneficial to market. As federal enforcement and supervision recede, we expect well-resourced, Democratic-led states to action in, producing a fragmented and uneven regulative landscape.

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While the supreme result of the litigation remains unknown, it is clear that consumer finance business across the ecosystem will benefit from decreased federal enforcement and supervisory threats as the administration starves the firm of resources and appears devoted to minimizing the bureau to an agency on paper just. Because Russell Vought was called acting director of the agency, the bureau has faced litigation challenging different administrative decisions intended to shutter it.

Vought also cancelled various mission-critical contracts, provided stop-work orders, and closed CFPB offices, to name a few actions. The CFPB chapter of the National Treasury Worker Union (NTEU) instantly challenged the actions. After evidentiary hearings, Judge Amy Berman Jackson of the United States District Court for the District of Columbia released a preliminary injunction stopping briefly the decreases in force (RIFs) and other actions, holding that the CFPB was trying to render itself functionally unusable.

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DOJ and CFPB legal representatives acknowledged that removing the bureau would need an act of Congress which the CFPB stayed accountable for performing its statutorily required functions under the Dodd-Frank Wall Street Reform and Consumer Protection Act. On August 15, 2025, the DC Circuit provided a 2-1 decision in favor of the CFPB, partially leaving Judge Berman Jackson's preliminary injunction that obstructed the bureau from carrying out mass RIFs, but remaining the decision pending appeal.

En banc hearings are hardly ever approved, however we expect NTEU's request to be approved in this circumstances, given the detailed district court record, Judge Cornelia Pillard's lengthy dissent on appeal, and more recent actions that indicate the Trump administration intends to functionally close the CFPB. In addition to prosecuting the RIFs and other administrative actions targeted at closing the agency, the Trump administration aims to develop off budget plan cuts integrated into the reconciliation expense passed in July to further starve the CFPB of resources.

Dodd-Frank insulates the CFPB from direct appropriations by Congress, instead authorizing it to demand funding directly from the Federal Reserve, with the amount topped at a portion of the Fed's operating costs, subject to a yearly inflation change. The bureau's ability to bypass Congress has routinely stirred criticism from congressional Republicans, and, in the spirit of that ire, the reconciliation package passed in July lowered the CFPB's funding from 12% of the Fed's business expenses to 6.5%.

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In CFPB v. Community Financial Providers Association of America, accuseds argued the funding method violated the Appropriations Stipulation of the Constitution. While the Fifth Circuit concurred, the United States Supreme Court did not. In a 7-2 decision in May 2024, Justice Clarence Thomas' majority viewpoint held the CFPB's financing method constitutional. The Trump administration makes the technical legal argument that the CFPB can not legally request financing from the Federal Reserve unless the Fed is profitable.

The CFPB said it would run out of money in early 2026 and might not lawfully request funding from the Fed, mentioning a memorandum viewpoint from the DOJ's Office of Legal Counsel (OLC). As an outcome, since the Fed has been running at a loss, it does not have "integrated earnings" from which the CFPB may lawfully draw funds.

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Appropriately, in early December, the CFPB acted on its filing by corresponding to Trump and Congress stating that the firm required approximately $280 million to continue performing its statutorily mandated functions. In our view, the new however recurring funding argument will likely be folded into the NTEU litigation.

Many consumer financing companies; mortgage lending institutions and servicers; automobile lending institutions and servicers; fintechs; smaller sized customer reporting, financial obligation collection, remittance, and auto finance companiesN/A We anticipate the CFPB to push strongly to execute an enthusiastic deregulatory program in 2026, in tension with the Trump administration's effort to starve the company of resources.

In September 2025, the CFPB published its Spring 2025 Regulatory Agenda, with 24 rulemakings. The program follows the firm's rescission of nearly 70 interpretive guidelines, policy declarations, circulars, and advisory opinions dating back to the company's inception. The bureau released its 2025 guidance and enforcement concerns memorandum, which highlighted a shift in guidance back to depository organizations and home mortgage lenders, an increased focus on locations such as scams, support for veterans and service members, and a narrower enforcement posture.

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We see the proposed guideline modifications as broadly beneficial to both consumer and small-business lending institutions, as they narrow potential liability and direct exposure to fair-lending examination. Especially relative to the Rohit Chopra-led CFPB during the Biden administration, we expect fair-lending guidance and enforcement to virtually disappear in 2026. A proposed guideline to narrow Equal Credit Opportunity Act (ECOA) policies intends to eliminate diverse effect claims and to narrow the scope of the discouragement arrangement that forbids lenders from making oral or written declarations intended to prevent a consumer from using for credit.

The new proposal, which reporting suggests will be completed on an interim basis no later on than early 2026, dramatically narrows the Biden-era rule to leave out particular small-dollar loans from coverage, lowers the limit for what is thought about a small company, and gets rid of lots of data fields. The CFPB appears set to issue an updated open banking rule in early 2026, with significant ramifications for banks and other standard banks, fintechs, and data aggregators across the customer finance environment.

The rule was finalized in March 2024 and included tiered compliance dates based upon the size of the monetary institution, with the largest required to begin compliance in April 2026. The final guideline was instantly challenged in Might 2024 by bank trade associations, which argued that the CFPB surpassed its statutory authority in releasing the guideline, particularly targeting the restriction on charges as unlawful.

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The court released a stay as CFPB reevaluated the guideline. In our view, the Vought-led bureau may think about allowing a "reasonable fee" or a comparable standard to make it possible for information service providers (e.g., banks) to recover costs related to offering the information while also narrowing the risk that fintechs and data aggregators are evaluated of the market.

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We expect the CFPB to significantly reduce its supervisory reach in 2026 by finalizing 4 bigger participant (LP) rules that establish CFPB supervisory jurisdiction over non-bank covered persons in various end markets. The modifications will benefit smaller operators in the customer reporting, auto financing, consumer financial obligation collection, and global money transfers markets.