Court-Backed CFPB Funding Maintains Oversight on Lenders

Consumer Financial Protection Bureau (CFPB) Acting Director Russell Vought has submitted a request for $145 million in funding from the Federal Reserve. This will allow the agency to operate until the end of March.

The submission was made after U.S. District Court Judge Amy Berman Jackson handed down a ruling last month that the CFPB could continue to seek funding during the course of a lawsuit challenging the structure of the agency.

Judge Jackson said this was a legally baseless pretext to get around her original order: “the defendants are unabashedly trying to shut the agency down again, through different means.”

For subprime lenders, the request signals that the CFPB will remain active — even as its long-term footing stays uncertain.

The CFPB does not depend on congressional appropriations. It draws quarterly funding from the Federal Reserve while the Fed reports operating losses.

The Trump administration said the bureau could not request funds under such conditions. This prompted lawsuits and court rulings that have so far allowed the CFPB to continue operating.

The latest request complies with the rulings, but it does not resolve the bigger dispute.

Sen. Elizabeth Warren, D-MA, on Friday said the administration had repeatedly attempted to kill the agency over the past year.

Vought “was forced to request funding for the agency because we fought back in the courts,” Warren said.

Democracy Forward President and CEO Skye Perryman said, “This is a big win for consumers. … Our case derailed Russ Vought’s plan to defund the CFPB — an agency that has been a critical defender of American consumers.”

At the same time, the American Banking Association has pointed to the operational strain created by prolonged regulatory uncertainty, especially for smaller lenders.

The funding issue affects enforcement priorities and complaint handling that affect subprime lenders. The bureau oversees debt collection and credit reporting, as well as expensive lending practices that hamper subprime consumers.

A funded CFPB will continue the core things it has been doing (i.e., complaint intake, selected enforcement actions). But consumer advocates say the work of this agency has to go on regardless of whether they are in a court fight over their authority.

The threat of litigation means that, while the CFPB’s leadership is in flux, many of its regulatory activities will likely slow down. 

The CFPB remains operational — but only as long as the courts support its ability to function. Uncertainty surrounding leadership direction and funding keeps pressure on the agency. This influences how aggressively it pursues oversight.

The $145 million request keeps the bureau limping along through March. Lenders should plan for continued supervision through then.