On November 10, the Consumer Financial Protection Bureau (CFPB) informed the US District Court for the District of Columbia that it expects to run out of funds in early 2026. The CFPB filed the Notice of Potential Lapse in the ongoing National Treasury Employees Union v. Vought lawsuit, in which the union representing CFPB employees is challenging the Trump administration’s efforts to shut down the agency.
Drawing on an opinion from the Department of Justice’s Office of Legal Counsel (OLC opinion), the CFPB further stated that it is not legally permitted to draw additional funds from the Federal Reserve. While the CFPB plans to outline its funding needs for Congress and the president, the CFPB states in the filing that potential appropriations are not guaranteed, leaving its operations up in the air.
CFPB funding
In the Notice, the CFPB anticipates having enough cash to operate through at least December 31, 2025, and complying with the existing court injunction governing employees, contracting and facilities. Beyond that date, the CFPB is uncertain about maintaining operations without new funding.
As to whether the CFPB can obtain additional funding, the CFPB requested an opinion from the OLC on whether the CFPB can lawfully draw funds from the Federal Reserve after determining that the Federal Reserve is “unprofitable.” The CFPB currently receives its funding from the Federal Reserve – not through congressional appropriations as most agencies do. Under the Dodd-Frank Act, the CFPB can only receive transfers from the Federal Reserve if the central bank is reporting “combined earnings of the Federal Reserve System.”[1] In its opinion, the OLC interprets “combined earnings” to mean “profits” and states that the CFPB can only access funds from the Federal Reserve when the Federal Reserve is operating at a profit (and not merely generating gross revenue). Because the Federal Reserve currently does not have profits, the OLC concludes that the agency cannot transfer funds to the CFPB.
The OLC opinion notes, and the CFPB reiterates in the Notice, that the CFPB is not “without recourse,” as the CFPB is statutorily empowered under the Dodd-Frank Act to report on the lack of funding and request additional funds from Congress and the president.[2] As noted, the CFPB plans to outline its funding needs in a letter to the president and the congressional appropriations committees.
The Anti-Deficiency Act
Without funding, the CFPB states that the Anti-Deficiency Act restricts its operations. The Anti-Deficiency Act prevents federal agencies from conducting business or making expenditures greater than, or in advance of, appropriations unless specifically authorized by law.[3] It also prohibits agencies from accepting voluntary services, except in very limited circumstances. Therefore, absent an appropriation or other legal authority, the CFPB’s position is that its staff cannot incur obligations or continue most operations, except for limited “emergencies” tied to human life or property.
The CFPB underscores in the Notice that while it understands the court’s injunction prevents it from firing employees, it does not interpret the injunction as requiring it to violate the Anti-Deficiency Act. In practical terms, if the CFPB runs out of funds, the CFPB’s Notice conveys that the agency will be required by law to make employment decisions, including potential layoffs, to comply with the Anti-Deficiency Act.
What’s next?
The CFPB’s filing highlights significant uncertainty about its future funding and operations. If insufficient or no funds are appropriated, it remains unclear whether – and how – the CFPB plans to fulfill its statutorily mandated operations to “regulate the offering and provision of consumer financial products or services under the Federal consumer financial laws.”[4] Already, as we previously discussed, the CFPB’s operations have been drastically curtailed under the leadership of Acting CFPB Director Russell Vought.
We also expect the National Treasury Employees Union to push back on the OLC opinion, the basis for the CFPB’s Notice, and request the court to weigh in on the meaning of “combined earnings” (particularly as others, such as the Texas attorney general, have explicitly rejected the argument that the CFPB can only draw funds from a Federal Reserve surplus as the Dodd-Frank Act “imposes no such “surplus limitation”).
Stay tuned for updates on this development.
[1] 12 US Code § 5497(a)(1).
[2] Id. § 5497(e)(1).
[3] 31 US Code § 1341.
[4] 12 US Code § 5491(a).