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Capstone thinks the Trump administration is intent on dismantling the Consumer Financial Protection Bureau (CFPB), even as the agencyconstrained by restricted budget plans and staffingmoves forward with a broad deregulatory rulemaking agenda favorable to market. As federal enforcement and guidance recede, we anticipate well-resourced, Democratic-led states to step in, producing a fragmented and uneven regulative landscape.

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While the ultimate result of the lawsuits remains unknown, it is clear that consumer financing companies across the ecosystem will gain from decreased federal enforcement and supervisory dangers as the administration starves the agency of resources and appears committed to minimizing the bureau to an agency on paper only. Because Russell Vought was named acting director of the agency, the bureau has faced litigation challenging different administrative decisions meant to shutter it.

Vought likewise cancelled many mission-critical contracts, released stop-work orders, and closed CFPB workplaces, amongst other actions. The CFPB chapter of the National Treasury Employees Union (NTEU) right away challenged the actions. After evidentiary hearings, Judge Amy Berman Jackson of the United States District Court for the District of Columbia provided an initial injunction pausing the reductions in force (RIFs) and other actions, holding that the CFPB was trying to render itself functionally inoperable.

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DOJ and CFPB lawyers acknowledged that removing the bureau would require an act of Congress which the CFPB remained 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 provided a 2-1 decision in favor of the CFPB, partly abandoning Judge Berman Jackson's initial injunction that obstructed the bureau from carrying out mass RIFs, however remaining the decision pending appeal.

En banc hearings are hardly ever granted, but we anticipate NTEU's request to be authorized in this circumstances, provided the comprehensive district court record, Judge Cornelia Pillard's lengthy dissent on appeal, and more recent actions that signify the Trump administration means to functionally close the CFPB. In addition to litigating the RIFs and other administrative actions targeted at closing the company, the Trump administration intends to build off budget plan cuts incorporated 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 financing straight from the Federal Reserve, with the amount capped at a portion of the Fed's operating costs, subject to an annual inflation modification. The bureau's ability to bypass Congress has actually frequently stirred criticism from congressional Republicans, and, in the spirit of that ire, the reconciliation plan passed in July decreased the CFPB's funding from 12% of the Fed's operating costs to 6.5%.

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

The technical legal argument was submitted in November in the NTEU lawsuits. The CFPB said it would lack money in early 2026 and might not lawfully demand financing from the Fed, mentioning a memorandum opinion from the DOJ's Workplace of Legal Counsel (OLC). Using the arguments made by accuseds in other CFPB litigation, the OLC's memorandum viewpoint translates the Dodd-Frank law, which allows the CFPB to draw funding from the "combined profits" of the Federal Reserve, to argue that "revenues" imply "revenue" instead of "earnings." As an outcome, since the Fed has been running at a loss, it does not have "combined profits" from which the CFPB may legally 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 recurring financing argument will likely be folded into the NTEU lawsuits.

Many customer financing companies; home loan lenders and servicers; vehicle lending institutions and servicers; fintechs; smaller customer reporting, debt collection, remittance, and automobile financing companiesN/A We anticipate the CFPB to press strongly to implement an enthusiastic deregulatory agenda in 2026, in stress 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 program follows the company's rescission of nearly 70 interpretive guidelines, policy statements, circulars, and advisory viewpoints dating back to the firm's creation. The bureau launched its 2025 guidance and enforcement top priorities memorandum, which highlighted a shift in guidance back to depository institutions and home mortgage lenders, an increased focus on areas such as fraud, assistance for veterans and service members, and a narrower enforcement posture.

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We view the proposed rule changes as broadly beneficial to both customer and small-business lenders, as they narrow potential liability and exposure to fair-lending analysis. Especially relative to the Rohit Chopra-led CFPB during the Biden administration, we expect fair-lending supervision and enforcement to practically disappear in 2026. A proposed rule to narrow Equal Credit Opportunity Act (ECOA) regulations intends to remove disparate impact claims and to narrow the scope of the frustration provision that forbids creditors from making oral or written statements intended to dissuade a consumer from using for credit.

The brand-new proposition, which reporting suggests will be settled on an interim basis no later than early 2026, significantly narrows the Biden-era guideline to leave out certain small-dollar loans from protection, decreases the limit for what is thought about a small service, and gets rid of numerous data fields. The CFPB appears set to issue an upgraded open banking rule in early 2026, with significant implications for banks and other standard banks, fintechs, and data aggregators throughout the consumer financing environment.

The rule was completed in March 2024 and consisted of tiered compliance dates based upon the size of the monetary institution, with the largest needed to begin compliance in April 2026. The last rule was immediately challenged in May 2024 by bank trade associations, which argued that the CFPB surpassed its statutory authority in issuing the guideline, particularly targeting the prohibition on charges as unlawful.

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The court provided a stay as CFPB reevaluated the guideline. In our view, the Vought-led bureau may consider allowing a "reasonable charge" or a comparable standard to make it possible for data companies (e.g., banks) to recoup expenses related to offering the data while also narrowing the danger that fintechs and data aggregators are evaluated of the marketplace.

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We expect the CFPB to dramatically lower its supervisory reach in 2026 by finalizing four larger individual (LP) guidelines that establish CFPB supervisory jurisdiction over non-bank covered individuals in various end markets. The changes will benefit smaller sized operators in the customer reporting, auto finance, customer financial obligation collection, and international cash transfers markets.