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Capstone thinks the Trump administration is intent on dismantling the Customer Financial Protection Bureau (CFPB), even as the agencyconstrained by restricted budget plans and staffingmoves forward with a broad deregulatory rulemaking agenda beneficial to industry. As federal enforcement and guidance recede, we expect well-resourced, Democratic-led states to step in, creating a fragmented and unequal regulatory landscape.

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While the supreme result of the litigation stays unidentified, it is clear that customer finance business across the ecosystem will benefit from reduced federal enforcement and supervisory threats as the administration starves the agency of resources and appears committed to lowering the bureau to a company on paper only. Because Russell Vought was named acting director of the agency, the bureau has faced litigation challenging numerous administrative choices meant to shutter it.

Vought likewise cancelled numerous mission-critical agreements, issued stop-work orders, and closed CFPB workplaces, among other actions. The CFPB chapter of the National Treasury Personnel Union (NTEU) immediately challenged the actions. After evidentiary hearings, Judge Amy Berman Jackson of the US District Court for the District of Columbia issued a preliminary injunction stopping briefly the reductions in force (RIFs) and other actions, holding that the CFPB was trying to render itself functionally unusable.

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DOJ and CFPB attorneys acknowledged that eliminating the bureau would need an act of Congress and that the CFPB stayed accountable for performing its statutorily required functions under the Dodd-Frank Wall Street Reform and Customer Defense Act. On August 15, 2025, the DC Circuit issued a 2-1 choice in favor of the CFPB, partially abandoning Judge Berman Jackson's preliminary injunction that obstructed the bureau from executing mass RIFs, but remaining the decision pending appeal.

En banc hearings are rarely approved, however we anticipate NTEU's request to be approved in this circumstances, provided the in-depth district court record, Judge Cornelia Pillard's prolonged dissent on appeal, and more current actions that signify the Trump administration means to functionally close the CFPB. In addition to prosecuting the RIFs and other administrative actions focused on closing the firm, the Trump administration aims to develop off budget cuts incorporated into the reconciliation costs passed in July to further starve the CFPB of resources.

Dodd-Frank insulates the CFPB from direct appropriations by Congress, rather authorizing it to demand financing directly from the Federal Reserve, with the amount capped at a percentage of the Fed's business expenses, subject to an annual inflation change. The bureau's capability to bypass Congress has routinely stirred criticism from congressional Republicans, and, in the spirit of that ire, the reconciliation plan passed in July reduced the CFPB's financing from 12% of the Fed's operating costs to 6.5%.

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In CFPB v. Community Financial Solutions Association of America, defendants argued the funding technique violated the Appropriations Clause of the Constitution. The Trump administration makes the technical legal argument that the CFPB can not lawfully demand financing from the Federal Reserve unless the Fed is lucrative.

The technical legal argument was submitted in November in the NTEU lawsuits. The CFPB said it would run out of cash in early 2026 and could not legally demand funding from the Fed, citing a memorandum opinion from the DOJ's Workplace of Legal Counsel (OLC). Utilizing the arguments made by offenders in other CFPB litigation, the OLC's memorandum viewpoint translates the Dodd-Frank law, which allows the CFPB to draw funding from the "combined earnings" of the Federal Reserve, to argue that "incomes" indicate "revenue" as opposed to "profits." As a result, due to the fact that the Fed has actually been running at a loss, it does not have "combined incomes" from which the CFPB may legally draw funds.

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Appropriately, in early December, the CFPB acted on its filing by sending out letters to Trump and Congress saying that the company needed approximately $280 million to continue performing its statutorily mandated functions. In our view, the new but recurring financing argument will likely be folded into the NTEU lawsuits.

Most consumer finance companies; home mortgage lending institutions and servicers; vehicle lenders and servicers; fintechs; smaller sized consumer reporting, debt collection, remittance, and car financing companiesN/A We expect the CFPB to press aggressively to implement an ambitious deregulatory agenda in 2026, in stress with the Trump administration's effort to starve the firm of resources.

In September 2025, the CFPB published its Spring 2025 Regulatory Program, with 24 rulemakings. The agenda follows the firm's rescission of almost 70 interpretive guidelines, policy declarations, circulars, and advisory viewpoints going back to the agency's inception. Similarly, the bureau released its 2025 supervision and enforcement priorities memorandum, which highlighted a shift in guidance back to depository institutions and home mortgage lending institutions, an increased focus on locations such as fraud, support for veterans and service members, and a narrower enforcement posture.

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We view the proposed rule changes as broadly favorable to both consumer and small-business lending institutions, as they narrow prospective liability and direct exposure to fair-lending analysis. Especially relative to the Rohit Chopra-led CFPB throughout the Biden administration, we anticipate fair-lending supervision and enforcement to essentially disappear in 2026. A proposed rule to narrow Equal Credit Chance Act (ECOA) regulations intends to eliminate disparate effect claims and to narrow the scope of the frustration provision that forbids lenders from making oral or written declarations meant to prevent a consumer from using for credit.

The brand-new proposition, which reporting recommends will be completed on an interim basis no later on than early 2026, drastically narrows the Biden-era guideline to omit specific small-dollar loans from coverage, reduces the limit for what is thought about a small company, and eliminates many information fields. The CFPB appears set to release an updated open banking guideline in early 2026, with considerable ramifications for banks and other standard banks, fintechs, and data aggregators across the consumer finance ecosystem.

The guideline was settled in March 2024 and included tiered compliance dates based on the size of the banks, with the biggest needed to start compliance in April 2026. The last rule was immediately challenged in Might 2024 by bank trade associations, which argued that the CFPB exceeded its statutory authority in releasing the rule, specifically targeting the restriction on costs as illegal.

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The court released a stay as CFPB reevaluated the guideline. In our view, the Vought-led bureau might consider permitting a "reasonable charge" or a comparable standard to allow information service providers (e.g., banks) to recover costs connected with supplying the data while also narrowing the risk that fintechs and information aggregators are priced out of the market.

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We expect the CFPB to significantly lower its supervisory reach in 2026 by finalizing four larger participant (LP) rules that develop CFPB supervisory jurisdiction over non-bank covered individuals in numerous end markets. The modifications will benefit smaller operators in the customer reporting, auto financing, customer financial obligation collection, and international cash transfers markets.