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Capstone believes the Trump administration is intent on taking apart the Customer Financial Security Bureau (CFPB), even as the agencyconstrained by limited spending plans and staffingmoves forward with a broad deregulatory rulemaking agenda beneficial to market. As federal enforcement and guidance decline, we anticipate well-resourced, Democratic-led states to action in, producing a fragmented and unequal regulative landscape.

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While the ultimate result of the litigation remains unknown, it is clear that consumer financing companies throughout the community will benefit from minimized federal enforcement and supervisory threats as the administration starves the firm of resources and appears devoted to lowering the bureau to a company on paper only. Since Russell Vought was named acting director of the company, the bureau has dealt with litigation challenging numerous administrative decisions planned to shutter it.

Vought likewise cancelled numerous mission-critical agreements, released stop-work orders, and closed CFPB workplaces, to name a few actions. The CFPB chapter of the National Treasury Personnel Union (NTEU) immediately challenged the actions. After evidentiary hearings, Judge Amy Berman Jackson of the United States District Court for the District of Columbia provided 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 legal representatives acknowledged that eliminating the bureau would require an act of Congress which the CFPB stayed responsible for performing its statutorily required functions under the Dodd-Frank Wall Street Reform and Consumer Protection Act. On August 15, 2025, the DC Circuit issued a 2-1 choice in favor of the CFPB, partly vacating Judge Berman Jackson's preliminary injunction that obstructed the bureau from implementing mass RIFs, but remaining the choice pending appeal.

En banc hearings are seldom given, however we anticipate NTEU's demand to be approved in this instance, provided the detailed district court record, Judge Cornelia Pillard's lengthy dissent on appeal, and more current actions that signal the Trump administration plans to functionally close the CFPB. In addition to prosecuting the RIFs and other administrative actions aimed at closing the company, the Trump administration aims to construct off budget plan cuts integrated into the reconciliation bill passed in July to even more starve the CFPB of resources.

Dodd-Frank insulates the CFPB from direct appropriations by Congress, rather licensing it to request funding directly from the Federal Reserve, with the quantity capped at a portion of the Fed's operating costs, based on a yearly inflation modification. The bureau's capability to bypass Congress has regularly stirred criticism from congressional Republicans, and, in the spirit of that ire, the reconciliation package passed in July lowered the CFPB's financing from 12% of the Fed's operating expenditures to 6.5%.

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In CFPB v. Neighborhood Financial Providers Association of America, offenders argued the financing approach breached the Appropriations Provision of the Constitution. The Trump administration makes the technical legal argument that the CFPB can not lawfully demand funding from the Federal Reserve unless the Fed is successful.

The technical legal argument was submitted in November in the NTEU litigation. The CFPB stated it would run out of cash in early 2026 and could not legally demand funding from the Fed, pointing out a memorandum viewpoint from the DOJ's Office of Legal Counsel (OLC). Utilizing the arguments made by offenders in other CFPB lawsuits, the OLC's memorandum opinion translates the Dodd-Frank law, which allows the CFPB to draw funding from the "combined incomes" of the Federal Reserve, to argue that "revenues" suggest "revenue" rather than "revenue." As an outcome, due to the fact that the Fed has been running at a loss, it does not have "integrated earnings" from which the CFPB may lawfully draw funds.

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Accordingly, in early December, the CFPB acted on its filing by sending out letters to Trump and Congress saying that the company needed approximately $280 million to continue performing its statutorily mandated functions. In our view, the new but repeating funding argument will likely be folded into the NTEU litigation.

Many customer finance companies; home mortgage loan providers and servicers; automobile loan providers and servicers; fintechs; smaller sized consumer reporting, debt collection, remittance, and automobile financing companiesN/A We expect the CFPB to press aggressively to implement an ambitious deregulatory program in 2026, in tension 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 program follows the firm's rescission of nearly 70 interpretive rules, policy statements, circulars, and advisory viewpoints going back to the company's beginning. The bureau launched its 2025 supervision and enforcement concerns memorandum, which highlighted a shift in supervision back to depository institutions and home loan lenders, an increased focus on locations such as fraud, support for veterans and service members, and a narrower enforcement posture.

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We view the proposed guideline modifications as broadly favorable to both customer and small-business lenders, as they narrow potential liability and direct exposure to fair-lending scrutiny. Particularly relative to the Rohit Chopra-led CFPB during the Biden administration, we expect fair-lending supervision and enforcement to essentially vanish in 2026. A proposed guideline to narrow Equal Credit Opportunity Act (ECOA) policies aims to remove diverse effect claims and to narrow the scope of the frustration provision that restricts lenders from making oral or written statements meant to dissuade a consumer from applying for credit.

The brand-new proposition, which reporting suggests will be settled on an interim basis no behind early 2026, significantly narrows the Biden-era rule to leave out specific small-dollar loans from coverage, decreases the threshold for what is thought about a small company, and eliminates many data fields. The CFPB appears set to issue an updated open banking rule in early 2026, with considerable implications for banks and other standard banks, fintechs, and data aggregators across the customer financing ecosystem.

The guideline was finalized in March 2024 and consisted of tiered compliance dates based upon the size of the banks, with the biggest needed to start compliance in April 2026. The final rule was immediately challenged in May 2024 by bank trade associations, which argued that the CFPB surpassed its statutory authority in releasing the guideline, specifically targeting the prohibition on fees as illegal.

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The court provided a stay as CFPB reconsidered the rule. In our view, the Vought-led bureau might consider permitting a "reasonable charge" or a similar requirement to make it possible for information suppliers (e.g., banks) to recover costs associated with providing the information while also narrowing the danger that fintechs and data aggregators are priced out of the market.

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We expect the CFPB to drastically reduce its supervisory reach in 2026 by completing four bigger participant (LP) guidelines that develop CFPB supervisory jurisdiction over non-bank covered persons in various end markets. The modifications will benefit smaller sized operators in the customer reporting, auto finance, customer financial obligation collection, and international cash transfers markets.