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

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While the supreme result of the litigation stays unknown, it is clear that consumer financing business throughout the ecosystem will benefit from decreased federal enforcement and supervisory threats as the administration starves the agency of resources and appears dedicated to decreasing the bureau to an agency on paper only. Since Russell Vought was called acting director of the company, the bureau has dealt with litigation challenging various administrative choices meant to shutter it.

Vought also cancelled various mission-critical agreements, issued stop-work orders, and closed CFPB workplaces, to name a few actions. The CFPB chapter of the National Treasury Worker Union (NTEU) right away challenged the actions. After evidentiary hearings, Judge Amy Berman Jackson of the United States District Court for the District of Columbia issued an initial injunction pausing the decreases in force (RIFs) and other actions, holding that the CFPB was trying 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 and that the CFPB remained responsible for performing its statutorily needed functions under the Dodd-Frank Wall Street Reform and Customer Defense Act. On August 15, 2025, the DC Circuit issued a 2-1 choice in favor of the CFPB, partly abandoning Judge Berman Jackson's initial injunction that blocked the bureau from implementing mass RIFs, but remaining the choice pending appeal.

En banc hearings are hardly ever given, however we anticipate NTEU's request to be authorized in this instance, given the comprehensive district court record, Judge Cornelia Pillard's prolonged dissent on appeal, and more current actions that indicate the Trump administration means to functionally close the CFPB. In addition to prosecuting the RIFs and other administrative actions aimed at closing the firm, the Trump administration intends to construct off budget plan cuts integrated into the reconciliation bill passed in July to further starve the CFPB of resources.

Dodd-Frank insulates the CFPB from direct appropriations by Congress, instead authorizing it to demand funding directly from the Federal Reserve, with the quantity capped at a percentage of the Fed's operating expenses, based on an annual inflation change. The bureau's capability to bypass Congress has routinely stirred criticism from congressional Republicans, and, in the spirit of that ire, the reconciliation plan passed in July minimized the CFPB's funding from 12% of the Fed's business expenses to 6.5%.

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

The technical legal argument was filed in November in the NTEU litigation. The CFPB stated it would lack money in early 2026 and could not lawfully request funding from the Fed, citing a memorandum viewpoint from the DOJ's Office of Legal Counsel (OLC). Using the arguments made by defendants in other CFPB lawsuits, the OLC's memorandum viewpoint interprets the Dodd-Frank law, which allows the CFPB to draw financing from the "combined incomes" of the Federal Reserve, to argue that "revenues" mean "profit" as opposed to "income." As a result, since 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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Appropriately, in early December, the CFPB followed up on its filing by corresponding to Trump and Congress stating that the agency needed approximately $280 million to continue performing its statutorily mandated functions. In our view, the brand-new however repeating funding argument will likely be folded into the NTEU lawsuits.

Most consumer financing business; mortgage lenders and servicers; auto lenders and servicers; fintechs; smaller sized consumer reporting, debt collection, remittance, and automobile financing companiesN/A We anticipate the CFPB to press aggressively to implement an enthusiastic 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 Agenda, with 24 rulemakings. The program follows the company's rescission of nearly 70 interpretive rules, policy statements, circulars, and advisory opinions dating back to the company's beginning. Similarly, the bureau released its 2025 supervision and enforcement concerns memorandum, which highlighted a shift in guidance back to depository institutions and home mortgage loan providers, 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 rule changes as broadly favorable to both customer and small-business lenders, as they narrow possible liability and direct exposure to fair-lending examination. Especially relative to the Rohit Chopra-led CFPB throughout the Biden administration, we anticipate fair-lending supervision and enforcement to practically vanish in 2026. First, a proposed guideline to narrow Equal Credit Opportunity Act (ECOA) guidelines aims to remove disparate effect claims and to narrow the scope of the frustration arrangement that restricts financial institutions from making oral or written statements intended to discourage a consumer from obtaining credit.

The new proposal, which reporting recommends will be settled on an interim basis no later on than early 2026, dramatically narrows the Biden-era rule to exclude specific small-dollar loans from coverage, lowers the limit for what is thought about a little service, and removes lots of data fields. The CFPB appears set to provide an updated open banking rule in early 2026, with substantial implications for banks and other standard banks, fintechs, and data aggregators throughout the consumer finance environment.

The rule was settled in March 2024 and included tiered compliance dates based on the size of the monetary institution, with the biggest needed to begin compliance in April 2026. The last rule was immediately challenged in Might 2024 by bank trade associations, which argued that the CFPB exceeded its statutory authority in releasing the guideline, particularly targeting the prohibition on fees as unlawful.

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The court provided a stay as CFPB reconsidered the guideline. In our view, the Vought-led bureau might think about allowing a "affordable fee" or a comparable standard to allow information companies (e.g., banks) to recover expenses related to supplying the data while also narrowing the danger that fintechs and information aggregators are evaluated of the marketplace.

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We expect the CFPB to drastically minimize its supervisory reach in 2026 by settling four larger participant (LP) guidelines that establish CFPB supervisory jurisdiction over non-bank covered persons in different end markets. The modifications will benefit smaller sized operators in the customer reporting, automobile financing, customer financial obligation collection, and international cash transfers markets.