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Capstone thinks the Trump administration is intent on taking apart the Customer Financial Protection Bureau (CFPB), even as the agencyconstrained by limited budget plans and staffingmoves forward with a broad deregulatory rulemaking program favorable to industry. As federal enforcement and guidance decline, we expect well-resourced, Democratic-led states to action in, developing a fragmented and unequal regulatory landscape.

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While the ultimate result of the litigation remains unknown, it is clear that customer finance companies throughout the environment will gain from minimized federal enforcement and supervisory risks as the administration starves the firm of resources and appears dedicated to lowering the bureau to a firm on paper only. Since Russell Vought was named acting director of the agency, the bureau has actually faced litigation challenging different administrative decisions planned to shutter it.

Vought also cancelled many 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) right away challenged the actions. After evidentiary hearings, Judge Amy Berman Jackson of the US District Court for the District of Columbia released a preliminary injunction stopping briefly the reductions in force (RIFs) and other actions, holding that the CFPB was trying to render itself functionally inoperable.

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DOJ and CFPB legal representatives acknowledged that getting rid of the bureau would need an act of Congress which the CFPB stayed accountable for performing its statutorily required functions under the Dodd-Frank Wall Street Reform and Customer Defense Act. On August 15, 2025, the DC Circuit provided a 2-1 decision in favor of the CFPB, partially abandoning Judge Berman Jackson's preliminary injunction that obstructed the bureau from carrying out mass RIFs, however staying the choice pending appeal.

En banc hearings are seldom given, but we expect NTEU's demand to be authorized in this instance, given the comprehensive district court record, Judge Cornelia Pillard's lengthy dissent on appeal, and more current actions that signify the Trump administration intends to functionally close the CFPB. In addition to litigating the RIFs and other administrative actions focused on closing the firm, the Trump administration intends to construct off budget plan cuts incorporated into the reconciliation expense passed in July to further starve the CFPB of resources.

Dodd-Frank insulates the CFPB from direct appropriations by Congress, rather licensing it to request funding straight from the Federal Reserve, with the quantity topped at a portion of the Fed's business expenses, subject to a yearly inflation modification. The bureau's capability to bypass Congress has frequently stirred criticism from congressional Republicans, and, in the spirit of that ire, the reconciliation package passed in July decreased the CFPB's funding from 12% of the Fed's operating costs to 6.5%.

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In CFPB v. Neighborhood Financial Services Association of America, offenders argued the funding method breached the Appropriations Provision of the Constitution. The Trump administration makes the technical legal argument that the CFPB can not legally request financing from the Federal Reserve unless the Fed is rewarding.

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 might not lawfully demand financing from the Fed, mentioning a memorandum viewpoint from the DOJ's Workplace of Legal Counsel (OLC). Using the arguments made by offenders in other CFPB litigation, the OLC's memorandum viewpoint analyzes the Dodd-Frank law, which allows the CFPB to draw funding from the "combined incomes" of the Federal Reserve, to argue that "profits" suggest "revenue" rather than "revenue." As an outcome, due to the fact that the Fed has actually been running at a loss, it does not have "integrated revenues" from which the CFPB might lawfully draw funds.

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Appropriately, in early December, the CFPB followed up on its filing by sending letters to Trump and Congress stating that the agency 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 lawsuits.

A lot of customer financing business; home mortgage loan providers and servicers; automobile lenders and servicers; fintechs; smaller sized customer reporting, debt collection, remittance, and car financing companiesN/A We anticipate the CFPB to press aggressively to execute an ambitious deregulatory program in 2026, in stress 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 almost 70 interpretive guidelines, policy statements, circulars, and advisory opinions going back to the firm's beginning. The bureau released its 2025 guidance and enforcement concerns memorandum, which highlighted a shift in supervision back to depository organizations and mortgage loan providers, an increased focus on areas such as fraud, assistance for veterans and service members, and a narrower enforcement posture.

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We see the proposed rule modifications as broadly beneficial to both consumer and small-business loan providers, as they narrow potential liability and direct exposure to fair-lending scrutiny. Specifically relative to the Rohit Chopra-led CFPB throughout the Biden administration, we anticipate fair-lending supervision and enforcement to essentially vanish in 2026. A proposed guideline to narrow Equal Credit Chance Act (ECOA) guidelines intends to eliminate diverse impact claims and to narrow the scope of the discouragement provision that prohibits financial institutions from making oral or written declarations intended to dissuade a consumer from using for credit.

The brand-new proposal, which reporting recommends will be settled on an interim basis no behind early 2026, dramatically narrows the Biden-era guideline to leave out certain small-dollar loans from coverage, lowers the threshold for what is considered a little company, and gets rid of many information fields. The CFPB appears set to release an updated open banking rule in early 2026, with significant implications for banks and other traditional banks, fintechs, and data aggregators across the consumer financing environment.

The rule was finalized in March 2024 and included tiered compliance dates based on the size of the monetary institution, with the biggest needed to start compliance in April 2026. The last guideline was instantly challenged in May 2024 by bank trade associations, which argued that the CFPB exceeded its statutory authority in issuing the guideline, specifically targeting the prohibition on charges as illegal.

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The court released a stay as CFPB reevaluated the rule. In our view, the Vought-led bureau may consider allowing a "reasonable charge" or a similar requirement to make it possible for information service providers (e.g., banks) to recover expenses associated with supplying the data while also narrowing the threat that fintechs and information aggregators are evaluated of the marketplace.

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We expect the CFPB to drastically lower its supervisory reach in 2026 by completing 4 larger participant (LP) guidelines that establish CFPB supervisory jurisdiction over non-bank covered individuals in numerous end markets. The modifications will benefit smaller operators in the customer reporting, automobile financing, customer financial obligation collection, and international money transfers markets.