The complaint argues that the Trump administration has misinterpreted the statute that created the CFPB, transforming a provision designed to ensure stable, independent funding into one that would exhaust the agency’s resources within weeks.
According to the lawsuit, Vought has used what plaintiffs describe as a “manufactured” funding crisis to begin winding down the bureau’s operations, including transferring active litigation to other agencies and developing plans to furlough CFPB employees.
The suit alleges that since February 2025, Vought has not requested funding and said the CFPB is relying on reserve funds instead. As a result, the reserves are now projected to run out in early 2026, triggering furloughs and shutdown preparations.
Neither the CFPB nor the White House Office of Management and Budget (OMB) responded to HousingWire‘s requests for comment.
The lawsuit comes about a month after the Trump administration declared the CFPB’s funding from the Federal Reserve unlawful in a court filing. Officials claim that the agency is legally barred from requesting additional money from the Federal Reserve, which has typically been the agency’s primary source of funding.
A day before the suit was filed, the CFPB’s top enforcement official, Michael Salemi, announced his resignation, citing frustration that the Trump administration is blocking nearly all agency activity.
Salemi’s concerns echo those of his predecessor, Cara Petersen, who resigned in June. In her resignation letter, Petersen said the Trump administration had “no intention to enforce the law in any meaningful way.”
But under the law, the new complaint states, the CFPB director is required to determine the amount of funding “reasonably necessary” for the agency to carry out its duties and request that amount from the Federal Reserve Board, which then transfers the funds.
The statute, plaintiffs argue, does not give the director the power to decline to make the request. The suit also claims that the Fed has “ample earnings available to satisfy any such request.”
“Vought’s new theory attributes to Congress an irrational scheme in which supervision of our nation’s largest financial institutions starts and stops based on the CFPB’s assessment of Fed finances,” said Stephanie Garlock, an attorney with the Public Citizen Litigation Group and lead lawyer on the case.
“The CFPB’s refusal to request funding from the Federal Reserve will cause substantial disruption to the financial institutions and the consumers it seeks to protect.”
Jesse Van Tol, president and CEO of NCRC, said in a release that undermining the work of the agency would have “dire consequences” for everyone.
“This administration’s unlawful attempt to void Congressional intent by disingenuously yanking the agency offline would only benefit bad actors to the detriment of honest firms and hardworking families alike.”
