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Capstone thinks the Trump administration is intent on dismantling the Consumer Financial Defense Bureau (CFPB), even as the agencyconstrained by minimal 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, developing a fragmented and irregular regulatory landscape.

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While the ultimate result of the litigation stays unidentified, it is clear that customer financing business throughout the community will gain from reduced federal enforcement and supervisory risks as the administration starves the agency of resources and appears devoted to decreasing the bureau to a company on paper only. Because Russell Vought was named acting director of the agency, the bureau has dealt with litigation challenging various administrative decisions planned to shutter it.

Vought also cancelled various mission-critical contracts, issued stop-work orders, and closed CFPB workplaces, 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 issued a preliminary injunction pausing the reductions in force (RIFs) and other actions, holding that the CFPB was attempting to render itself functionally inoperable.

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DOJ and CFPB attorneys acknowledged that eliminating the bureau would require an act of Congress and that the CFPB remained accountable for performing its statutorily required functions under the Dodd-Frank Wall Street Reform and Customer Protection Act. On August 15, 2025, the DC Circuit provided a 2-1 choice in favor of the CFPB, partially vacating Judge Berman Jackson's preliminary injunction that blocked the bureau from implementing mass RIFs, however staying the decision pending appeal.

En banc hearings are rarely granted, however we expect NTEU's demand to be authorized in this instance, provided the detailed district court record, Judge Cornelia Pillard's prolonged dissent on appeal, and more recent actions that indicate the Trump administration plans to functionally close the CFPB. In addition to litigating the RIFs and other administrative actions aimed at closing the agency, the Trump administration aims to build off budget 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 request funding directly from the Federal Reserve, with the quantity capped at a portion of the Fed's business expenses, based on an annual inflation modification. The bureau's capability to bypass Congress has regularly stirred criticism from congressional Republicans, and, in the spirit of that ire, the reconciliation bundle passed in July minimized the CFPB's funding from 12% of the Fed's operating costs to 6.5%.

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In CFPB v. Neighborhood Financial Solutions Association of America, defendants argued the financing technique breached 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 successful.

The technical legal argument was submitted in November in the NTEU litigation. The CFPB stated it would lack money in early 2026 and could not legally demand funding from the Fed, pointing out a memorandum viewpoint from the DOJ's Workplace of Legal Counsel (OLC). Using the arguments made by offenders in other CFPB lawsuits, the OLC's memorandum opinion interprets the Dodd-Frank law, which permits the CFPB to draw financing from the "combined incomes" of the Federal Reserve, to argue that "incomes" mean "earnings" rather than "revenue." As a result, due to the fact that the Fed has been running at a loss, it does not have actually "integrated profits" from which the CFPB might lawfully draw funds.

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Accordingly, in early December, the CFPB followed up on its filing by corresponding to Trump and Congress saying that the firm needed roughly $280 million to continue performing its statutorily mandated functions. In our view, the new but repeating financing argument will likely be folded into the NTEU litigation.

Most customer financing companies; home mortgage lending institutions and servicers; automobile lending institutions and servicers; fintechs; smaller sized customer reporting, debt collection, remittance, and auto financing companiesN/A We anticipate the CFPB to push aggressively to execute an ambitious deregulatory agenda in 2026, in tension with the Trump administration's effort to starve the company of resources.

In September 2025, the CFPB released its Spring 2025 Regulatory Agenda, with 24 rulemakings. The agenda follows the agency's rescission of almost 70 interpretive rules, policy declarations, circulars, and advisory opinions dating back to the agency's creation. The bureau released its 2025 supervision and enforcement concerns memorandum, which highlighted a shift in guidance back to depository institutions and home loan lenders, 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 modifications as broadly favorable to both customer and small-business lending institutions, as they narrow potential liability and exposure to fair-lending examination. Especially relative to the Rohit Chopra-led CFPB during the Biden administration, we anticipate fair-lending supervision and enforcement to essentially vanish in 2026. Initially, a proposed guideline to narrow Equal Credit Opportunity Act (ECOA) regulations intends to remove diverse effect claims and to narrow the scope of the discouragement provision that forbids lenders from making oral or written declarations planned to dissuade a customer from applying for credit.

The new proposal, which reporting recommends will be settled on an interim basis no behind early 2026, significantly narrows the Biden-era guideline to omit certain small-dollar loans from protection, lowers the threshold for what is considered a small service, and gets rid of many information fields. The CFPB appears set to provide an updated open banking rule in early 2026, with substantial ramifications for banks and other standard monetary organizations, fintechs, and data aggregators across the customer financing community.

The rule was settled in March 2024 and included tiered compliance dates based on the size of the financial organization, with the largest needed to begin compliance in April 2026. The final guideline was immediately challenged in May 2024 by bank trade associations, which argued that the CFPB surpassed its statutory authority in providing the guideline, specifically targeting the prohibition on costs as illegal.

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The court released a stay as CFPB reevaluated the rule. In our view, the Vought-led bureau may think about permitting a "affordable cost" or a comparable requirement to allow information suppliers (e.g., banks) to recover costs associated with offering the data while also narrowing the threat that fintechs and information aggregators are evaluated of the marketplace.

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We expect the CFPB to considerably lower its supervisory reach in 2026 by finalizing 4 larger participant (LP) guidelines that develop CFPB supervisory jurisdiction over non-bank covered persons in various end markets. The modifications will benefit smaller sized operators in the consumer reporting, automobile finance, customer financial obligation collection, and global cash transfers markets.