A federal court has ruled that the Trump administration cannot starve the U.S. Consumer Financial Protection Bureau of funding, delivering a sharp rebuke to efforts that would effectively shutter the agency by cutting off its cash flow.
The decision comes as the consumer watchdog edges toward a financial cliff. Officials warn the bureau’s existing reserves could be depleted by early 2026, after months in which the administration declined to secure additional funds following its takeover of the agency earlier this year.
In a detailed ruling, the judge said the administration’s argument—that it was legally blocked from seeking more money—doesn’t hold water. A prior court order already prevents the government from dismantling the bureau, and withholding funds would amount to doing just that by other means.
The administration had pointed to an internal legal view claiming the bureau could not request further funding from the Federal Reserve while the central bank is operating at a loss. The court dismissed that interpretation as a convenient workaround designed to sidestep an existing injunction.
The judge wrote that the government’s new reading of the law appeared to be a transparent attempt to reach the very outcome the court had already forbidden, and said a unilateral refusal to fund the agency would violate the earlier order.
The Consumer Financial Protection Bureau was created in the aftermath of the 2008 financial crisis to police consumer lending, financial scams and abusive practices. Supporters argue that without it, borrowers and everyday consumers would be left more vulnerable. Critics, including President Donald Trump, have long accused the agency of politicized enforcement and say it places unnecessary burdens on businesses.
Unlike most federal bodies, the CFPB does not rely on an annual congressional budget. Instead, it draws funding from the Federal Reserve. That structure, however, has been tightened: lawmakers recently reduced the maximum amount the bureau is allowed to receive, setting the stage for continued financial pressure even with the court’s ruling.
For now, the message from the bench was unmistakable—efforts to quietly switch off the lights at the consumer watchdog will not pass judicial scrutiny.
