Judge rules CFPB can draw funds from FED despite central bank losses

A federal judge ruled on September 25 that the Consumer Financial Protection Bureau can receive money from the Federal Reserve, rejecting the Trump administration’s claim that funding is restricted when the central bank is losing money. The 2010 Dodd-Frank law requires the Federal Reserve to send the CFPB funds deemed "reasonably necessary" from its "combined earnings" every quarter. Acting CFPB Director Russell Vought had previously refused to request the usual draw, arguing that "combined earnings" refers only to leftover profit, and since the Federal Reserve has reported losses in recent years, there was nothing to transfer.

The ruling clarifies the statutory funding mechanism for the CFPB, which operates outside of annual Congressional appropriations. This decision addresses a dispute over the interpretation of "combined earnings" within the Dodd-Frank law, impacting the agency's operational capacity.

Russell Vought directs CFPB guidance on lending, while the administration issues executive orders advising regulators on credit risk and restricting immigrant access to finance.