States sue White House over gutting of consumer watchdog

(CN) — A group of attorneys general sued the Trump administration Monday, claiming it’s failed to properly fund the federal agency tasked with protecting consumers in the financial marketplace.

Twenty-two attorneys general filed the suit in the District of Oregon against Russell T. Vought, acting director of the Consumer Financial Protection Bureau. Other named defendants include the bureau itself and the Board of Governors of the Federal Reserve System.

The attorneys general claim Vought refused to ask for necessary funding for the protection bureau from the Fed — violations of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

“Since his appointment to the CFPB as acting director on Feb. 7, 2025, defendant Russell T. Vought has worked tirelessly to terminate the CFPB’s operations by any means necessary — denying plaintiffs access to CFPB resources to which they are statutorily entitled,” the attorneys general say in their complaint.

In a press conference Monday, Oregon Attorney General Dan Rayfield called Vought’s move an attack on Americans, as the bureau is the agency that is a watchdog for consumers. Additionally, it’s another salvo from President Donald Trump, along with hidden taxes in the form of tariffs and lowered taxes for the wealthy.

“I’m just going to say what’s on everyone’s mind — what the heck is the president thinking right now?” Rayfield said.

The bureau’s creation stemmed from the 2008 financial crisis. It enforces certain federal consumer protection laws and has an online complaint system and database, enabling consumers to submit complaints about financial services and products, and in turn receive responses.

The attorneys general say it’s returned over $20 billion to consumers since its inception.

Reversing a decade of precedent, Vought now claims the Fed has no money available for the bureau as its interest expenses exceed its interest income. He says he can’t legally request funding from the Fed in that case.

California Attorney General Rob Bonta called that a flawed legal opinion.

“These two decisions … make it all but certain that the CFPB will run out of funding completely in January 2026,” the attorneys general say in their suit, adding the decisions violate congressional mandates and the Administrative Procedure Act.

The attorneys general ask a judge to declare those decisions unlawful, set them aside and permanently stop the defendants from implementing them.

The Fed must fund the bureau even if it’s operating at a loss, the attorneys general claim. Federal Reserve chair Jerome Powell testified to that this year before the U.S. Senate Committee on Banking, Housing and Urban Affairs.

Also, the U.S. Supreme Court last year upheld the funding method for the bureau in a challenge that argued it violated the Constitution’s appropriations clause, the attorneys general say.

“It was designed to put everyday Americans first,” Bonta said.

The bureau’s consumer response system plays a large role in the attorneys generals’ argument. It’s a system that collects, tracks and facilities answers to consumer complaints. It received over 3 million complaints last year.

Those who fall under the bureau’s purview must provide responses to complaints. Last year over $90 million went back to consumers — payments directly linked to people complaining, the attorneys general say.

Losing access to the consumer complaint database will negatively affect investigations and litigation by the attorneys general.

They argue this isn’t the Trump administration’s first attempt to gut the bureau.

Vought in February sent a letter to Powell requesting zero dollars for the bureau’s third quarter operations this year, adding it would use its reserve fund instead. He also emailed bureau staff, telling them to stop working and later tried to fire almost the entire staff.

An employee union sued and obtained a judge’s order stopping Vought from dismantling the office.

Rayfield argued Trump could push for a change in the law if he wants to defund the bureau. He didn’t take that route because he knew he couldn’t get enough support in Congress.

“It’s a lot easier to destroy something than it is to build something,” Colorado Attorney General Phil Weiser said.