A coalition of consumer advocacy groups has filed a lawsuit seeking to block what they call a deliberate attempt by Acting CFPB Director Russell Vought and the Trump administration to “shut down” the Consumer Financial Protection Bureau by cutting off its access to funding. The case, filed in the Northern District of California, marks the most direct legal challenge yet to the administration’s effort to wind down the Bureau after months of internal turmoil, shrinking reserves, and warnings of an imminent funding lapse.
The suit, brought by Rise Economy, the Woodstock Institute, and the National Community Reinvestment Coalition, argues that Vought has unlawfully refused to request the money the CFPB is entitled to receive from the Federal Reserve, instead embracing a new DOJ interpretation that the central bank currently has no “combined earnings” available to support the agency. The groups say the move is illegal, manufactured, and designed to force the CFPB into insolvency.
What’s happening:
- The complaint says Vought has requested no funding since February and privately stated he expects to “close down the agency” within months.
- Internal steps already underway include preparing furlough plans, transferring litigation to DOJ, and winding down enforcement functions as the CFPB projects it will exhaust its reserves in early 2026.
- Plaintiffs argue the statute requires the CFPB Director to request whatever funding is “reasonably necessary” to carry out the agency’s work, giving Vought no discretion to decline.
- The lawsuit also disputes DOJ’s “earnings” theory, noting that the Federal Reserve continues to generate revenue and that the administration’s interpretation contradicts a decade of CFPB practice and the statutory purpose of providing stable, non-appropriated funding.
What they said: Advocates warned the consequences of a shutdown would reach far beyond Washington:
- Public Citizen attorney Stephanie Garlock said the refusal to request funding would “cause substantial disruption to the financial institutions and the consumers it seeks to protect.”
- NCRC CEO Jesse Van Tol called the move an attempt to “void Congressional intent” that would benefit “bad actors” over honest firms.
- Woodstock Institute CEO Horacio Mendez warned that shuttering the CFPB amid rising scams and fraud risks is “reprehensible” and threatens financial-system stability.
- Sen. Elizabeth Warren [D-Mass.] said the administration is already under one court order to keep the CFPB open and called Vought’s plan “illegal” and “ridiculous.”
