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Capstone believes the Trump administration is intent on dismantling the Consumer Financial Security Bureau (CFPB), even as the agencyconstrained by limited budgets and staffingmoves forward with a broad deregulatory rulemaking program beneficial to industry. As federal enforcement and supervision recede, we expect well-resourced, Democratic-led states to step in, developing a fragmented and unequal regulative landscape.

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While the supreme outcome of the lawsuits stays unknown, it is clear that customer financing business throughout the ecosystem will gain from minimized federal enforcement and supervisory threats as the administration starves the company of resources and appears devoted to lowering the bureau to an agency on paper just. Given That Russell Vought was called acting director of the agency, the bureau has faced lawsuits challenging different administrative choices meant to shutter it.

Vought also cancelled many mission-critical agreements, provided stop-work orders, and closed CFPB offices, amongst other 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 released a preliminary injunction stopping briefly 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 need 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 provided a 2-1 choice in favor of the CFPB, partly leaving Judge Berman Jackson's preliminary injunction that obstructed the bureau from carrying out mass RIFs, but staying the choice pending appeal.

En banc hearings are seldom approved, but we expect NTEU's request to be authorized in this instance, given the comprehensive district court record, Judge Cornelia Pillard's prolonged dissent on appeal, and more recent actions that indicate the Trump administration intends to functionally close the CFPB. In addition to litigating the RIFs and other administrative actions focused on closing the agency, the Trump administration intends to develop off spending plan cuts included into the reconciliation expense passed in July to even more starve the CFPB of resources.

Dodd-Frank insulates the CFPB from direct appropriations by Congress, rather authorizing it to request financing straight from the Federal Reserve, with the amount capped at a portion of the Fed's operating costs, based on an annual inflation adjustment. The bureau's ability to bypass Congress has actually routinely stirred criticism from congressional Republicans, and, in the spirit of that ire, the reconciliation package passed in July reduced the CFPB's funding from 12% of the Fed's business expenses to 6.5%.

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In CFPB v. Community Financial Solutions Association of America, defendants argued the financing approach broke the Appropriations Clause of the Constitution. While the Fifth Circuit agreed, the US Supreme Court did not. In a 7-2 decision in May 2024, Justice Clarence Thomas' majority opinion held the CFPB's funding approach constitutional. The Trump administration makes the technical legal argument that the CFPB can not lawfully demand funding from the Federal Reserve unless the Fed pays.

The technical legal argument was submitted in November in the NTEU lawsuits. The CFPB stated it would lack cash in early 2026 and could not legally demand financing from the Fed, mentioning a memorandum opinion from the DOJ's Workplace of Legal Counsel (OLC). Utilizing the arguments made by accuseds in other CFPB lawsuits, the OLC's memorandum viewpoint translates the Dodd-Frank law, which permits the CFPB to draw funding from the "combined earnings" of the Federal Reserve, to argue that "earnings" imply "earnings" rather than "earnings." As a result, due to the fact that the Fed has been running at a loss, it does not have "combined earnings" from which the CFPB might lawfully draw funds.

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Appropriately, in early December, the CFPB followed up on its filing by sending out letters to Trump and Congress stating that the company required approximately $280 million to continue performing its statutorily mandated functions. In our view, the new however recurring funding argument will likely be folded into the NTEU litigation.

Most consumer financing companies; home mortgage lending institutions and servicers; auto lenders and servicers; fintechs; smaller sized consumer reporting, debt collection, remittance, and automobile financing companiesN/A We expect the CFPB to push strongly to execute an ambitious deregulatory agenda in 2026, in stress with the Trump administration's effort to starve the company of resources.

In September 2025, the CFPB released its Spring 2025 Regulatory Program, with 24 rulemakings. The agenda follows the company's rescission of nearly 70 interpretive guidelines, policy statements, circulars, and advisory viewpoints going back to the firm's beginning. Similarly, the bureau launched its 2025 guidance and enforcement priorities memorandum, which highlighted a shift in guidance back to depository organizations and home mortgage loan providers, an increased focus on areas such as scams, assistance for veterans and service members, and a narrower enforcement posture.

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We see the proposed rule changes as broadly favorable to both customer and small-business lending institutions, as they narrow potential liability and direct exposure to fair-lending examination. Specifically relative to the Rohit Chopra-led CFPB throughout the Biden administration, we anticipate fair-lending supervision and enforcement to essentially disappear in 2026. First, a proposed guideline to narrow Equal Credit Chance Act (ECOA) guidelines aims to remove diverse impact claims and to narrow the scope of the frustration provision that prohibits creditors from making oral or written statements meant to prevent a consumer from requesting credit.

The new proposition, which reporting recommends will be finalized on an interim basis no behind early 2026, considerably narrows the Biden-era rule to leave out particular small-dollar loans from protection, reduces the limit for what is thought about a little business, and removes numerous data fields. The CFPB appears set to release an updated open banking guideline in early 2026, with substantial implications for banks and other standard financial institutions, fintechs, and information aggregators throughout the consumer finance environment.

The rule was settled in March 2024 and included tiered compliance dates based on the size of the monetary organization, with the largest required to begin compliance in April 2026. The last guideline was immediately challenged in May 2024 by bank trade associations, which argued that the CFPB exceeded its statutory authority in providing the guideline, specifically targeting the restriction on costs as illegal.

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The court provided a stay as CFPB reevaluated the rule. In our view, the Vought-led bureau may think about allowing a "reasonable fee" or a similar requirement to enable data service providers (e.g., banks) to recover expenses connected with providing the data while also narrowing the danger that fintechs and information aggregators are priced out of the market.

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We expect the CFPB to significantly reduce its supervisory reach in 2026 by finalizing four bigger individual (LP) guidelines that establish CFPB supervisory jurisdiction over non-bank covered individuals in different end markets. The changes will benefit smaller sized operators in the customer reporting, car finance, customer debt collection, and international cash transfers markets.