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Capstone believes the Trump administration is intent on dismantling the Consumer Financial Security Bureau (CFPB), even as the agencyconstrained by restricted budgets and staffingmoves forward with a broad deregulatory rulemaking program favorable to industry. As federal enforcement and supervision recede, we expect well-resourced, Democratic-led states to action in, developing a fragmented and unequal regulatory landscape.

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While the supreme outcome of the litigation remains unidentified, it is clear that consumer finance business throughout the environment will benefit from reduced federal enforcement and supervisory threats as the administration starves the firm of resources and appears dedicated to minimizing the bureau to a company on paper only. Considering That Russell Vought was called acting director of the company, the bureau has dealt with lawsuits challenging different administrative decisions meant to shutter it.

Vought likewise cancelled many mission-critical agreements, issued stop-work orders, and closed CFPB offices, among other actions. The CFPB chapter of the National Treasury Worker Union (NTEU) immediately challenged the actions. After evidentiary hearings, Judge Amy Berman Jackson of the United States District Court for the District of Columbia provided an initial injunction pausing the reductions in force (RIFs) and other actions, holding that the CFPB was trying to render itself functionally unusable.

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DOJ and CFPB lawyers acknowledged that eliminating the bureau would need an act of Congress which the CFPB remained responsible for performing its statutorily required functions under the Dodd-Frank Wall Street Reform and Consumer Security Act. On August 15, 2025, the DC Circuit issued a 2-1 decision in favor of the CFPB, partly abandoning Judge Berman Jackson's initial injunction that obstructed the bureau from implementing mass RIFs, however remaining the decision pending appeal.

En banc hearings are rarely granted, however we expect NTEU's request to be approved in this instance, provided the detailed district court record, Judge Cornelia Pillard's prolonged dissent on appeal, and more current actions that signify the Trump administration means to functionally close the CFPB. In addition to prosecuting the RIFs and other administrative actions targeted at closing the firm, the Trump administration intends to develop off spending plan cuts included into the reconciliation costs passed in July to even more starve the CFPB of resources.

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

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In CFPB v. Community Financial Providers Association of America, defendants argued the funding approach breached the Appropriations Stipulation of the Constitution. While the Fifth Circuit agreed, the US Supreme Court did not. In a 7-2 decision in May 2024, Justice Clarence Thomas' majority opinion held the CFPB's funding approach constitutional. The Trump administration makes the technical legal argument that the CFPB can not legally request financing from the Federal Reserve unless the Fed is lucrative.

The CFPB said it would run out of cash in early 2026 and could not lawfully request financing from the Fed, pointing out a memorandum opinion from the DOJ's Workplace of Legal Counsel (OLC). As a result, because the Fed has been running at a loss, it does not have actually "combined profits" from which the CFPB might lawfully draw funds.

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Accordingly, in early December, the CFPB followed up on its filing by sending out letters to Trump and Congress stating that the firm needed around $280 million to continue performing its statutorily mandated functions. In our view, the new however repeating financing argument will likely be folded into the NTEU lawsuits.

A lot of customer finance business; home mortgage lending institutions and servicers; car lending institutions and servicers; fintechs; smaller consumer reporting, debt collection, remittance, and car finance companiesN/A We expect the CFPB to press strongly to carry out an enthusiastic deregulatory program in 2026, in stress with the Trump administration's effort to starve the firm of resources.

In September 2025, the CFPB released its Spring 2025 Regulatory Agenda, with 24 rulemakings. The program follows the company's rescission of almost 70 interpretive rules, policy statements, circulars, and advisory viewpoints going back to the firm's beginning. Similarly, the bureau launched its 2025 guidance and enforcement concerns memorandum, which highlighted a shift in guidance back to depository organizations and home loan loan providers, an increased focus on locations such as scams, support for veterans and service members, and a narrower enforcement posture.

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We see the proposed rule changes as broadly favorable to both consumer and small-business lenders, as they narrow potential liability and direct exposure to fair-lending scrutiny. 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 rule to narrow Equal Credit Opportunity Act (ECOA) regulations aims to eliminate disparate impact claims and to narrow the scope of the discouragement arrangement that forbids financial institutions from making oral or written declarations intended to dissuade a consumer from getting credit.

The brand-new proposal, which reporting recommends will be settled on an interim basis no later on than early 2026, dramatically narrows the Biden-era guideline to exclude specific small-dollar loans from protection, decreases the threshold for what is considered a small company, and removes many data fields. The CFPB appears set to provide an upgraded open banking guideline in early 2026, with significant implications for banks and other traditional banks, fintechs, and data aggregators throughout the consumer finance environment.

The guideline was settled in March 2024 and included tiered compliance dates based on the size of the banks, with the biggest required to start compliance in April 2026. The final guideline was right away challenged in May 2024 by bank trade associations, which argued that the CFPB exceeded its statutory authority in issuing the rule, particularly targeting the prohibition on fees as unlawful.

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The court released a stay as CFPB reconsidered the guideline. In our view, the Vought-led bureau might think about permitting a "reasonable charge" or a comparable requirement to allow information providers (e.g., banks) to recoup expenses connected with providing the information while likewise narrowing the risk that fintechs and data aggregators are evaluated of the market.

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We anticipate the CFPB to significantly minimize its supervisory reach in 2026 by settling 4 larger participant (LP) guidelines that establish CFPB supervisory jurisdiction over non-bank covered individuals in various end markets. The modifications will benefit smaller sized operators in the customer reporting, auto financing, consumer financial obligation collection, and worldwide money transfers markets.