Trump admin ordered to keep funding consumer protection bureau

SAN JOSE, Calif. (CN) — A federal judge said his Friday order to the director of a federal consumer protection agency was meant to ensure it operates as Congress intended and not by government fiat.

U.S. District Judge Edward Davila said in his ruling the decision by the Consumer Financial Protection Bureau to forego funding requests was arbitrary and capricious. He ordered Russell Vought, acting director of the bureau, to request its funding and do its job.

“Vought’s plan to ‘shut down’ the CFPB using this clearly erroneous interpretation of [the law] frustrates Congress’s intent to insulate the bureau’s funding stream from this exact transparent display of partisanship,” the Barack Obama appointee said.

Rise Economy and other nonprofits had challenged Vought and the bureau’s decision to stop requesting funding from the Federal Reserve.

Vought had determined that he couldn’t request funding because the Federal Reserve didn’t have the combined earnings needed to provide the money. It was the first time since the creation of the Dodd-Frank Act a director had taken that position, the judge said.

Vought’s decision came a day after President Donald Trump designated him in February 2025 as the bureau’s acting director. He sent a letter to the Federal Reserve Board asking for zero dollars for the third quarter of the fiscal year, as he’d determined the bureau could operate with existing reserves. Months later, Vought in an interview said he was working toward closing the agency, which would take a few months, the judge said.

The acting director later said the bureau had spent its reserves, though he wouldn’t ask the Federal Reserve for funding. He said it lacked the combined earnings, and he’d instead ask Congress for the money. However, lawmakers would have to pass an appropriations bill to fund the bureau, which wasn’t certain.

Attorneys opposing the bureau’s decision in a related case have argued the most reasonable definition of “combined earnings” is all money earned by each of the 12 regional banks in the Federal Reserve System. Vought argued that it’s instead an ad hoc form of net profit that exists nowhere in the wider financial industry.

That case is currently stayed.

When Congress created the bureau, it also made a funding mechanism free from appropriations bills and partisan politics. Congressional funding would only be a backstop, Davila said.

“As recently as May 2025, it appears Congress understood that achieving a stable funding source requires that the Federal Reserve provide funding regardless of its ‘profits,’” he added.

Vought and the bureau pushed back against the nonprofits’ suit, calling the case moot. They’ve already requested and received funding for the current fiscal quarter — a requirement of another court — and said they’ll continue to ask for money, if the Federal Reserve remains “profitable.” They also argued it’s impossible for a judge to side with the nonprofits because it’s only hypothetical they wouldn’t ask for funding in the future.

Davila disagreed on both counts.

A temporary injunction in another court doesn’t remove another judge’s jurisdiction over a similar case. Additionally, willingly asking for funding doesn’t mean the bureau would continue making those requests, the judge said.

“Here, plaintiffs’ complaint seeks funding not only for the current fiscal quarter, but funding for every quarter moving forward,” Davila said. “The complaint specifically challenges defendants’ determination to ‘starv[e] the CFPB of funding’ based on ‘an erroneous interpretation of the statutory provision creating a standing appropriation for the CFPB.’”

Stephanie Garlock, attorney at Public Citizen Litigation Group and lead counsel for the plaintiffs, said the Trump administration tried to stop the bureau from doing its job: protecting American consumers.

“Today’s court decision puts an end to that unlawful gambit and ensures that the CFPB will have a stable source of funding to support its work going forward, as Congress intended,” she said in a statement.

A spokesperson for the Department of Justice couldn’t immediately be reached for comment.