A Federal Court has dealt Trump’s (R) Administration a Legal Setback, Ordering Officials to continue Funding Payments to Employees at a Powerful Consumer Watchdog Agency just Days before the Agency was set to Run-Out of Money. The Ruling forces the White House to keep Money flowing to the Consumer Financial Protection Bureau {CFPB), Temporarily Blocking an Effort that Critics say was Designed to Shut the Agency Down from the Inside.
U.S. District Judge Amy Berman Jackson Upheld an Injunction Requiring the Administration to continue Funding the CFPB through the Federal Reserve. The Timing was Critical, as Without the Ruling, the Agency was expected to Run-Out-of-Money within Days, leaving it Unable to Pay its Remaining Employees and potentially Triggering Layoffs.
Jackson Rejected an Argument from Russell Vought (R) Director of the Office of Management and Budget (OMB) who’s also currently the Acting Director of the CFPB, claiming Losses at the Federal Reserve meant it No Longer had an Obligation to Fund the CFPB. “It appears that defendants’ new understanding of ‘combined earnings’ is an unsupported and transparent attempt to starve the CFPB of funding,” Jackson wrote, calling it “yet another effort to achieve the very outcome the court’s injunction was meant to prevent.”
The CFPB was Created after the 2008 Financial Crisis to Protect Consumers from Abusive and Deceptive Financial Practices. Since its Launch, the Agency has returned more than $21 billion to Consumers. Its Funding Structure is Unusual, in that instead of Relying on Annual Congressional Appropriations, the CFPB receives Money from the Federal Reserve, a design meant to Insulate it from Political Pressure.
That Structure has made the Agency a frequent Target of Conservative Attacks. Since Trump took Office, CFPB Employees were Teportedly told Not to do any Work in an Effort to Shut-Down the Agency. At the Center of the Dispute was the Trump Administration’s claim that the Federal Reserve could Not Fund the CFPB, because it is currently Operating at a Paper Loss.
Officials Argued thatHhigher Interest Payments on Bank Reserves now Outweigh Income from Bonds purchased during the COVID-19 era, meaning there were No “combined earnings” Aavailable to Disburse. That Interpretation, laid out in a Memo from the Office of Legal Counsel last fall, had never been Tested in Court. Judge Jackson Rejected it.
“We’re very pleased that the court made clear what should have been obvious,” said Jennifer Bennett, an Attorney Representing CFPB Staff. “Vought cannot justify abandoning the agency’s obligations or violating a court order by manufacturing a lack of funding,” She added. The Ruling comes Amid a Larger Campaign to Weaken or Dismantle the CFPB.
In 2024, the U.S. Supreme Court Upheld the Agency’s Funding Structure in a 7-2 Decision, Rejecting a Lawsuit from Payday Lenders. Writing for the Majority, Justice Clarence Thomas said the CFPB’s Funding meets Constitutional Requirements. “Congress specified the source, the Federal Reserve, from which the CFPB can draw its funding, and it indicated how the CFPB is supposed to use that funding,” He wrote.
Separately, Michigan Attorney General Dana Nessel (D) is Leading a Coalition of 21 States Suing the Trump Administration over its Attempt to Defund the Agency, Calling the Move “disastrous for the millions of working families this federal bureau defends every day.” In a December 2025 Statement, Nessel said, “The Trump administration does not have the authority to illegally and unilaterally defund it by simply refusing to do its job.”
The White House, meanwhile, has Accused the CFPB of “government overreach,” Claiming the Agency Granted itself Sweeping New Powers during the Final Days of Former President Joe Biden’s (D) Administration.
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