A federal judge yesterday blocked the Trump administration’s latest attempt to defund and effectively shut down the Consumer Financial Protection Bureau, ruling that the agency must continue to receive funding from the Federal Reserve even while broader legal battles over its future play out.
In a sharply worded decision issued Tuesday, Judge Amy Berman Jackson of the District Court for the District of Columbia rejected a new legal theory advanced by the White House that would have allowed CFPB funding to lapse as early as 2026. The administration had argued that because the Federal Reserve has been operating at a paper loss in recent years, it no longer has sufficient “combined earnings” to fund the Bureau under the Dodd-Frank Act.
Judge Jackson disagreed, concluding that the argument was legally flawed, inconsistent with decades of practice, and incompatible with an existing court injunction designed to preserve the CFPB’s operations while litigation continues. In her ruling, she made clear that the administration cannot sidestep that injunction by simply refusing to request funds.
“Neither the statute, the injunction, nor the Fed’s willingness to pay has changed,” Jackson wrote, adding that the only new development was the administration’s determination to eliminate an agency created by Congress.
The decision represents another setback for Acting CFPB Director and White House budget chief Russell Vought, who has publicly stated his intent to wind down the agency. Since President Trump’s return to office, the CFPB has been largely dormant, with most employees barred from performing routine duties and agency leadership focused on unwinding prior enforcement and supervisory work.
Central to the dispute is the CFPB’s unusual funding structure. Unlike most federal agencies, the Bureau does not rely on annual congressional appropriations. Instead, Congress directed the Federal Reserve to transfer funds each year that the CFPB director determines are “reasonably necessary” to carry out its statutory mission. Judge Jackson ruled that the administration’s narrow interpretation of “combined earnings” improperly rewrites that statute and contradicts long-standing practice by both the Fed and the CFPB.
The court also emphasized that any claimed funding “lapse” would be self-inflicted. Declining to request funds, the judge said, would amount to an intentional work stoppage, which her earlier injunction expressly forbids.
The broader fight over the CFPB’s long-term structure and independence is far from over. The D.C. Circuit Court of Appeals is expected to weigh next year on whether and how the executive branch can dismantle a congressionally created agency. Until then, Judge Jackson’s order ensures the CFPB cannot be quietly shut down by starving it of funds
