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Capstone thinks the Trump administration is intent on taking apart the Consumer Financial Protection Bureau (CFPB), even as the agencyconstrained by limited budgets and staffingmoves forward with a broad deregulatory rulemaking agenda favorable to market. As federal enforcement and supervision decline, we anticipate well-resourced, Democratic-led states to step in, creating a fragmented and irregular regulatory landscape.

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While the supreme outcome of the lawsuits stays unknown, it is clear that consumer finance business throughout the ecosystem will gain from reduced federal enforcement and supervisory risks as the administration starves the company of resources and appears devoted to minimizing the bureau to a company on paper only. Because Russell Vought was called acting director of the agency, the bureau has actually dealt with litigation challenging numerous administrative decisions meant to shutter it.

Vought likewise cancelled many mission-critical agreements, provided stop-work orders, and closed CFPB offices, to name a few actions. The CFPB chapter of the National Treasury Employees Union (NTEU) instantly challenged the actions. After evidentiary hearings, Judge Amy Berman Jackson of the United States District Court for the District of Columbia provided a preliminary injunction pausing the decreases in force (RIFs) and other actions, holding that the CFPB was attempting to render itself functionally inoperable.

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DOJ and CFPB lawyers acknowledged that getting rid of the bureau would require an act of Congress and that the CFPB remained responsible for performing its statutorily required functions under the Dodd-Frank Wall Street Reform and Consumer Defense Act. On August 15, 2025, the DC Circuit issued a 2-1 decision in favor of the CFPB, partially leaving Judge Berman Jackson's preliminary injunction that obstructed the bureau from executing mass RIFs, however staying the choice pending appeal.

En banc hearings are rarely granted, but we anticipate NTEU's request to be authorized in this circumstances, given the detailed district court record, Judge Cornelia Pillard's prolonged dissent on appeal, and more current actions that signal 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 construct off budget cuts included 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 licensing 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 change. 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 financing from 12% of the Fed's operating expenditures to 6.5%.

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In CFPB v. Community Financial Providers Association of America, defendants argued the funding method broke the Appropriations Clause of the Constitution. The Trump administration makes the technical legal argument that the CFPB can not legally demand funding 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 money in early 2026 and might not legally request financing from the Fed, citing 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 opinion analyzes the Dodd-Frank law, which allows the CFPB to draw funding from the "combined profits" of the Federal Reserve, to argue that "revenues" indicate "profit" rather than "revenue." As a result, since the Fed has been performing at a loss, it does not have "integrated revenues" from which the CFPB may lawfully draw funds.

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Accordingly, in early December, the CFPB followed up on its filing by sending letters to Trump and Congress saying that the agency required around $280 million to continue performing its statutorily mandated functions. In our view, the new but recurring funding argument will likely be folded into the NTEU litigation.

Most consumer financing companies; home loan lending institutions and servicers; auto lenders and servicers; fintechs; smaller consumer reporting, debt collection, remittance, and auto finance companiesN/A We anticipate the CFPB to press aggressively to carry out 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 agency's rescission of nearly 70 interpretive rules, policy statements, circulars, and advisory viewpoints going back to the company's inception. Similarly, the bureau released its 2025 supervision and enforcement concerns memorandum, which highlighted a shift in guidance back to depository organizations and home loan lending institutions, an increased focus on areas 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 consumer and small-business lending institutions, as they narrow potential liability and direct exposure to fair-lending analysis. Specifically relative to the Rohit Chopra-led CFPB during the Biden administration, we anticipate fair-lending guidance and enforcement to essentially vanish in 2026. A proposed guideline to narrow Equal Credit Chance Act (ECOA) guidelines intends to get rid of diverse impact claims and to narrow the scope of the discouragement provision that restricts creditors from making oral or written statements intended to dissuade a customer from applying for credit.

The brand-new proposition, which reporting recommends will be finalized on an interim basis no later than early 2026, dramatically narrows the Biden-era guideline to omit specific small-dollar loans from coverage, reduces the limit for what is considered a little service, and gets rid of numerous data fields. The CFPB appears set to issue an updated open banking rule in early 2026, with considerable implications for banks and other conventional monetary organizations, fintechs, and information aggregators throughout the customer financing ecosystem.

The guideline was finalized in March 2024 and included tiered compliance dates based upon the size of the banks, with the biggest required to begin compliance in April 2026. The last rule was right away challenged in Might 2024 by bank trade associations, which argued that the CFPB exceeded its statutory authority in releasing the guideline, particularly targeting the restriction on fees as illegal.

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The court provided a stay as CFPB reassessed the rule. In our view, the Vought-led bureau may consider allowing a "sensible fee" or a similar requirement to enable information providers (e.g., banks) to recover costs connected with offering the information while likewise narrowing the threat that fintechs and data aggregators are evaluated of the market.

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We anticipate the CFPB to drastically lower its supervisory reach in 2026 by settling four bigger individual (LP) rules that develop CFPB supervisory jurisdiction over non-bank covered individuals in numerous end markets. The changes will benefit smaller sized operators in the consumer reporting, car finance, consumer debt collection, and worldwide cash transfers markets.