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Capstone believes the Trump administration is intent on taking apart the Consumer Financial Protection Bureau (CFPB), even as the agencyconstrained by minimal budgets and staffingmoves forward with a broad deregulatory rulemaking program beneficial to industry. As federal enforcement and guidance recede, we anticipate well-resourced, Democratic-led states to action in, developing a fragmented and uneven regulative landscape.

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While the ultimate result of the lawsuits remains unknown, it is clear that consumer financing business across the ecosystem will benefit from minimized federal enforcement and supervisory dangers as the administration starves the firm of resources and appears committed to decreasing the bureau to a firm on paper only. Considering That Russell Vought was called acting director of the agency, the bureau has actually faced litigation challenging different administrative choices planned to shutter it.

Vought also cancelled numerous mission-critical contracts, issued stop-work orders, and closed CFPB workplaces, to name a few 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 released an initial injunction pausing the reductions in force (RIFs) and other actions, holding that the CFPB was attempting to render itself functionally unusable.

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DOJ and CFPB attorneys acknowledged that getting rid of the bureau would require an act of Congress and that the CFPB remained responsible for performing its statutorily required functions under the Dodd-Frank Wall Street Reform and Consumer Protection 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 carrying out mass RIFs, but remaining the decision pending appeal.

En banc hearings are seldom granted, however we expect NTEU's request to be authorized in this circumstances, offered the in-depth district court record, Judge Cornelia Pillard's lengthy dissent on appeal, and more recent actions that signal the Trump administration means to functionally close the CFPB. In addition to litigating the RIFs and other administrative actions focused on closing the company, the Trump administration intends to develop off spending plan cuts integrated into the reconciliation expense passed in July to further starve the CFPB of resources.

Dodd-Frank insulates the CFPB from direct appropriations by Congress, instead licensing it to request financing directly from the Federal Reserve, with the amount capped at a percentage of the Fed's operating costs, subject to a yearly inflation adjustment. The bureau's ability to bypass Congress has routinely stirred criticism from congressional Republicans, and, in the spirit of that ire, the reconciliation bundle passed in July minimized the CFPB's funding from 12% of the Fed's operating expenses to 6.5%.

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In CFPB v. Neighborhood Financial Services Association of America, defendants argued the funding technique broke the Appropriations Provision of the Constitution. The Trump administration makes the technical legal argument that the CFPB can not legally demand financing from the Federal Reserve unless the Fed is successful.

The CFPB said it would run out of money in early 2026 and could not legally demand funding from the Fed, mentioning a memorandum opinion from the DOJ's Office of Legal Counsel (OLC). As an outcome, because the Fed has been running at a loss, it does not have actually "integrated incomes" from which the CFPB may legally draw funds.

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Appropriately, in early December, the CFPB acted on its filing by sending letters to Trump and Congress saying that the company required roughly $280 million to continue performing its statutorily mandated functions. In our view, the new but recurring funding argument will likely be folded into the NTEU litigation.

Most consumer financing business; mortgage loan providers and servicers; auto lenders and servicers; fintechs; smaller sized consumer reporting, financial obligation collection, remittance, and vehicle financing companiesN/A We anticipate the CFPB to press aggressively to execute an enthusiastic deregulatory agenda in 2026, in tension with the Trump administration's effort to starve the agency of resources.

In September 2025, the CFPB released its Spring 2025 Regulatory Agenda, with 24 rulemakings. The agenda follows the company's rescission of almost 70 interpretive rules, policy declarations, circulars, and advisory opinions dating back to the firm's inception. The bureau released its 2025 supervision and enforcement priorities memorandum, which highlighted a shift in supervision back to depository organizations and mortgage lenders, an increased focus on areas such as scams, assistance for veterans and service members, and a narrower enforcement posture.

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We view the proposed rule changes as broadly beneficial to both consumer and small-business loan providers, as they narrow potential liability and direct exposure to fair-lending analysis. Specifically relative to the Rohit Chopra-led CFPB throughout the Biden administration, we expect fair-lending supervision and enforcement to virtually vanish in 2026. A proposed guideline to narrow Equal Credit Opportunity Act (ECOA) policies aims to remove disparate impact claims and to narrow the scope of the frustration arrangement that forbids financial institutions from making oral or written declarations meant to discourage a customer from using for credit.

The brand-new proposal, which reporting suggests will be completed on an interim basis no behind early 2026, significantly narrows the Biden-era rule to exclude specific small-dollar loans from protection, reduces the limit for what is thought about a little company, and gets rid of numerous data fields. The CFPB appears set to issue an upgraded open banking guideline in early 2026, with considerable implications for banks and other standard monetary institutions, fintechs, and information aggregators across the customer finance environment.

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

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The court issued a stay as CFPB reassessed the guideline. In our view, the Vought-led bureau might think about permitting a "sensible charge" or a comparable requirement to enable data providers (e.g., banks) to recoup expenses connected with offering the information while also narrowing the danger that fintechs and information aggregators are evaluated of the marketplace.

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We anticipate the CFPB to dramatically minimize its supervisory reach in 2026 by settling 4 larger participant (LP) guidelines that establish CFPB supervisory jurisdiction over non-bank covered individuals in different end markets. The changes will benefit smaller operators in the consumer reporting, car finance, customer debt collection, and global cash transfers markets.