Democratic Attorneys General File Lawsuit to Block Defunding of Consumer Financial Protection Bureau
A coalition of Democratic attorneys general from 21 states and the District of Columbia has filed a federal lawsuit in Oregon seeking to block the current administration from defunding the Consumer Financial Protection Bureau (CFPB). The suit challenges the administration's decision to not seek additional funding for the agency from the Federal Reserve, which plaintiffs argue violates the Constitution's separation of powers and Congress's authority over agency funding.
The plaintiffs contend that denying funding would hinder the CFPB's ability to fulfill its obligation to process and respond to consumer complaints. The CFPB's acting head, Russell Vought, has reportedly halted most agency activities while funding decisions remain contested.
Since its inception in 2011 during the Obama administration following the 2008 financial crisis, the CFPB has been funded directly by the Federal Reserve. Under the Dodd-Frank Act, its funds are to come from the Fed's combined earnings. However, the current administration claims that these funds are unavailable due to losses sustained by the Federal Reserve since 2022. The CFPB warned in a November court filing that its funds could be depleted by early 2026.
This lawsuit is part of broader legal actions, including separate suits filed in Washington, DC, and California by a federal employees' union and nonprofit organizations, all seeking to compel the CFPB to resume its funding requests. Supporters highlight that the CFPB has returned more than $21 billion to consumers since its establishment.
