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Capstone believes the Trump administration is intent on dismantling the Customer Financial Protection Bureau (CFPB), even as the agencyconstrained by minimal budgets and staffingmoves forward with a broad deregulatory rulemaking program favorable to market. As federal enforcement and guidance recede, we anticipate well-resourced, Democratic-led states to action in, developing a fragmented and irregular regulative landscape.

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While the ultimate result of the litigation stays unknown, it is clear that consumer financing business across the environment will take advantage of decreased federal enforcement and supervisory risks as the administration starves the agency of resources and appears dedicated to minimizing the bureau to a company on paper only. Given That Russell Vought was named acting director of the agency, the bureau has actually dealt with litigation challenging different administrative decisions planned to shutter it.

Vought also cancelled many mission-critical contracts, issued stop-work orders, and closed CFPB offices, 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 an initial injunction pausing the reductions in force (RIFs) and other actions, holding that the CFPB was attempting to render itself functionally unusable.

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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 responsible for performing its statutorily needed functions under the Dodd-Frank Wall Street Reform and Consumer Defense Act. On August 15, 2025, the DC Circuit issued a 2-1 choice in favor of the CFPB, partially leaving Judge Berman Jackson's preliminary injunction that obstructed the bureau from implementing mass RIFs, however staying the choice pending appeal.

En banc hearings are hardly ever given, but we expect NTEU's request to be authorized in this circumstances, offered the comprehensive district court record, Judge Cornelia Pillard's lengthy dissent on appeal, and more current actions that signal 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 aims to build 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, instead licensing it to request financing straight from the Federal Reserve, with the amount capped at a percentage of the Fed's operating costs, based on a yearly inflation change. The bureau's ability to bypass Congress has frequently stirred criticism from congressional Republicans, and, in the spirit of that ire, the reconciliation plan passed in July reduced the CFPB's financing from 12% of the Fed's business expenses to 6.5%.

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In CFPB v. Community Financial Providers Association of America, defendants argued the financing technique breached the Appropriations Provision of the Constitution. The Trump administration makes the technical legal argument that the CFPB can not legally demand financing from the Federal Reserve unless the Fed is lucrative.

The technical legal argument was submitted in November in the NTEU lawsuits. The CFPB said it would run out of cash in early 2026 and could not lawfully demand financing from the Fed, pointing out a memorandum viewpoint from the DOJ's Workplace of Legal Counsel (OLC). Using the arguments made by offenders in other CFPB lawsuits, the OLC's memorandum viewpoint interprets the Dodd-Frank law, which permits the CFPB to draw financing from the "combined earnings" of the Federal Reserve, to argue that "revenues" imply "profit" rather than "income." As an outcome, due to the fact that the Fed has been performing at a loss, it does not have "combined revenues" from which the CFPB may legally draw funds.

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Accordingly, in early December, the CFPB acted on its filing by sending out letters to Trump and Congress stating that the agency required approximately $280 million to continue performing its statutorily mandated functions. In our view, the new however recurring funding argument will likely be folded into the NTEU lawsuits.

Most consumer finance companies; mortgage lending institutions and servicers; automobile lenders and servicers; fintechs; smaller consumer reporting, debt collection, remittance, and auto financing companiesN/A We anticipate the CFPB to press strongly to carry out an ambitious deregulatory agenda in 2026, in tension with the Trump administration's effort to starve the firm of resources.

In September 2025, the CFPB published its Spring 2025 Regulatory Agenda, with 24 rulemakings. The program follows the company's rescission of almost 70 interpretive guidelines, policy declarations, circulars, and advisory viewpoints dating back to the firm's creation. Likewise, the bureau launched its 2025 guidance and enforcement concerns memorandum, which highlighted a shift in supervision back to depository institutions and mortgage lending institutions, an increased concentrate on areas such as fraud, assistance for veterans and service members, and a narrower enforcement posture.

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We view the proposed rule changes as broadly beneficial to both customer and small-business lenders, as they narrow possible liability and exposure to fair-lending analysis. Particularly relative to the Rohit Chopra-led CFPB during the Biden administration, we expect fair-lending guidance and enforcement to practically disappear in 2026. Initially, a proposed guideline to narrow Equal Credit Opportunity Act (ECOA) policies aims to get rid of disparate impact claims and to narrow the scope of the discouragement provision that prohibits creditors from making oral or written declarations intended to discourage a customer from making an application for credit.

The new proposition, which reporting recommends will be completed on an interim basis no behind early 2026, drastically narrows the Biden-era guideline to exclude particular small-dollar loans from coverage, reduces the limit for what is considered a little organization, and removes lots of information fields. The CFPB appears set to provide an updated open banking guideline in early 2026, with considerable ramifications for banks and other traditional financial organizations, fintechs, and data aggregators across the consumer financing ecosystem.

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

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The court released a stay as CFPB reassessed the guideline. In our view, the Vought-led bureau may consider permitting a "affordable cost" or a comparable requirement to allow data suppliers (e.g., banks) to recover costs related to supplying the information while also narrowing the threat that fintechs and information aggregators are priced out of the marketplace.

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We expect the CFPB to dramatically decrease its supervisory reach in 2026 by settling four larger participant (LP) rules that develop CFPB supervisory jurisdiction over non-bank covered persons in various end markets. The modifications will benefit smaller operators in the consumer reporting, vehicle financing, customer financial obligation collection, and worldwide cash transfers markets.