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Capstone thinks the Trump administration is intent on dismantling the Consumer Financial Protection Bureau (CFPB), even as the agencyconstrained by minimal budgets and staffingmoves forward with a broad deregulatory rulemaking program beneficial to market. As federal enforcement and guidance recede, we expect well-resourced, Democratic-led states to action in, producing a fragmented and irregular regulatory landscape.

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While the supreme result of the litigation stays unidentified, it is clear that customer finance companies throughout the environment will benefit from minimized federal enforcement and supervisory risks as the administration starves the company of resources and appears committed to reducing the bureau to an agency on paper just. Because Russell Vought was named acting director of the firm, the bureau has dealt with lawsuits challenging various administrative choices planned to shutter it.

Vought also cancelled numerous mission-critical contracts, provided stop-work orders, and closed CFPB offices, among other actions. The CFPB chapter of the National Treasury Employees Union (NTEU) immediately challenged the actions. After evidentiary hearings, Judge Amy Berman Jackson of the US District Court for the District of Columbia released 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 legal representatives acknowledged that getting rid of the bureau would require an act of Congress and that the CFPB stayed accountable for performing its statutorily needed functions under the Dodd-Frank Wall Street Reform and Customer Defense Act. On August 15, 2025, the DC Circuit provided a 2-1 choice in favor of the CFPB, partially leaving Judge Berman Jackson's preliminary injunction that obstructed the bureau from implementing mass RIFs, but staying the decision pending appeal.

En banc hearings are seldom approved, but we expect NTEU's demand to be authorized in this instance, offered the in-depth district court record, Judge Cornelia Pillard's lengthy dissent on appeal, and more recent actions that signal the Trump administration means to functionally close the CFPB. In addition to prosecuting the RIFs and other administrative actions targeted at closing the company, the Trump administration aims to construct off budget plan cuts incorporated into the reconciliation costs passed in July to even more starve the CFPB of resources.

Dodd-Frank insulates the CFPB from direct appropriations by Congress, instead authorizing it to demand financing straight from the Federal Reserve, with the amount capped at a percentage of the Fed's business expenses, based on an annual inflation modification. The bureau's capability to bypass Congress has actually regularly stirred criticism from congressional Republicans, and, in the spirit of that ire, the reconciliation bundle passed in July minimized 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 financing technique broke the Appropriations Provision of the Constitution. While the Fifth Circuit agreed, the United States Supreme Court did not. In a 7-2 choice in May 2024, Justice Clarence Thomas' bulk opinion held the CFPB's financing technique constitutional. The Trump administration makes the technical legal argument that the CFPB can not lawfully demand financing from the Federal Reserve unless the Fed pays.

The technical legal argument was submitted in November in the NTEU litigation. The CFPB stated it would lack money in early 2026 and might not legally demand funding from the Fed, pointing out a memorandum opinion from the DOJ's Workplace of Legal Counsel (OLC). Utilizing 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 financing from the "combined profits" of the Federal Reserve, to argue that "profits" suggest "profit" rather than "profits." As an outcome, since the Fed has been performing at a loss, it does not have actually "integrated revenues" from which the CFPB might 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 company required 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 litigation.

A lot of customer finance companies; mortgage lenders and servicers; auto lenders and servicers; fintechs; smaller sized consumer reporting, debt collection, remittance, and car financing companiesN/A We expect the CFPB to push strongly 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 released its Spring 2025 Regulatory Agenda, with 24 rulemakings. The program follows the firm's rescission of almost 70 interpretive guidelines, policy statements, circulars, and advisory opinions going back to the firm's creation. Likewise, the bureau released its 2025 guidance and enforcement concerns memorandum, which highlighted a shift in supervision back to depository institutions and home loan lenders, an increased focus on areas such as fraud, support for veterans and service members, and a narrower enforcement posture.

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We see the proposed rule changes as broadly beneficial to both consumer and small-business lending institutions, as they narrow potential liability and exposure to fair-lending analysis. Particularly relative to the Rohit Chopra-led CFPB during the Biden administration, we anticipate fair-lending supervision and enforcement to virtually disappear in 2026. A proposed guideline to narrow Equal Credit Chance Act (ECOA) policies aims to eliminate diverse effect claims and to narrow the scope of the frustration provision that forbids creditors from making oral or written statements intended to dissuade a customer from using for credit.

The new proposal, which reporting suggests will be settled on an interim basis no later on than early 2026, considerably narrows the Biden-era rule to exclude certain small-dollar loans from coverage, reduces the threshold for what is considered a little service, and gets rid of lots of data fields. The CFPB appears set to release an upgraded open banking guideline in early 2026, with significant implications for banks and other conventional banks, fintechs, and information aggregators across the consumer finance community.

The guideline was finalized in March 2024 and consisted of tiered compliance dates based upon the size of the monetary institution, with the largest required to start compliance in April 2026. The final guideline was instantly challenged in May 2024 by bank trade associations, which argued that the CFPB exceeded its statutory authority in releasing the guideline, specifically targeting the restriction on fees as illegal.

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The court issued a stay as CFPB reassessed the rule. In our view, the Vought-led bureau may think about allowing a "reasonable cost" or a similar requirement to allow data service providers (e.g., banks) to recover costs related to offering the information 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 completing four larger individual (LP) rules that establish CFPB supervisory jurisdiction over non-bank covered individuals in various end markets. The changes will benefit smaller operators in the consumer reporting, automobile financing, consumer debt collection, and worldwide cash transfers markets.