What's happened
Judge Amy Berman Jackson ruled that the CFPB can continue to receive funding from the Federal Reserve despite the Fed operating at a loss. The decision counters the White House's legal argument that the agency's funding stream is invalid due to the Fed's financial status. The case centers on whether acting director Russell Vought can shut down the bureau and lay off staff, with the court affirming the agency's funding rights and criticizing the administration's legal tactics. The CFPB has been largely inoperable since early 2025, with efforts to dismantle it ongoing.
What's behind the headline?
The court's decision solidifies the CFPB's funding rights, reinforcing its independence from political interference. The White House's legal argument, centered on the Fed's operating losses and the 'no earnings' claim, is a strategic attempt to starve the agency of resources and effectively shut it down. This legal maneuvering highlights broader efforts by the current administration to diminish the bureau's authority, which has historically played a key role in consumer protection. The ruling signals that attempts to manipulate the agency's funding through financial technicalities will be challenged in court. Moving forward, the CFPB's ability to operate will depend on congressional appropriations, but the court's stance makes it clear that the agency's funding cannot be arbitrarily cut off based on the Fed's financial status. This case underscores the ongoing tension between independent regulators and political appointees seeking to limit their influence, with potential implications for the future of financial oversight in the US.
What the papers say
The New York Times reports that Judge Amy Berman Jackson emphasized the legal invalidity of the White House's 'combined earnings' argument, stating it was an unsupported attempt to starve the CFPB of funding. The Independent highlights the broader context of Vought's efforts to dismantle the bureau and the legal battles over its funding, noting that the Fed's operating losses are a result of high interest rates and bond maturities. AP News underscores the court's affirmation of the CFPB's funding rights despite the Fed's losses, framing it as a victory for the agency's independence amid ongoing political pressure. All sources agree that the court's ruling is a significant setback for efforts to weaken the CFPB through financial legalities, reaffirming its operational funding and independence.
How we got here
The CFPB was created in 2010 to oversee consumer financial protection, funded through the Federal Reserve to shield it from political influence. Since President Trump took office, efforts to weaken or shut down the bureau have increased, including Vought's directives to cease new work and lay off staff. The White House has challenged the bureau's funding, especially as the Fed operates at a loss due to high interest rates and bond maturities, leading to legal disputes over whether the CFPB can draw funds from the Fed's earnings. The court's recent ruling affirms the bureau's right to funding despite these financial challenges.
Go deeper
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The Consumer Financial Protection Bureau (CFPB) is an independent agency of the United States government responsible for consumer protection in the financial sector. CFPB's jurisdiction includes banks, credit unions, securities firms, payday lenders,...
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Russell Thurlow Vought is an American former government official who served as the Director of the Office of Management and Budget from July 2020 to January 2021.
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The Federal Reserve System is the central banking system of the United States of America. It was created on December 23, 1913, with the enactment of the Federal Reserve Act, after a series of financial panics led to the desire for central control of the m