Litigation centers on conflict over language in the 2010 Dodd-Frank Act– the law that produced the CFPB after the 2008 monetary crisis.
Unlike the majority of government agencies, the CFPB doesn’t get its money from Congress through annual appropriations. Instead, it’s moneyed directly from the Federal Reserve, which raises cash through bank fees and other activities.
Current law states the Fed shall transfer money to the CFPB from the “combined earnings” of the Federal Reserve System.
Vought, who was named acting director in February 2025, asked the Office of Legal Counsel for an opinion on what “combined incomes” means. In November, that workplace concluded it means revenues– suggesting if the Fed isn’t profitable, the CFPB can’t get cash from it.
Based upon that opinion, Vought chose not to ask the Fed for cash. He instead asked Congress straight for financing, a process that would have required legislators to pass a brand-new spending expense.
Three not-for-profit groups that count on CFPB data– Rise Economy, the Woodstock Institute and the National Community Reinvestment Coalition– sued, arguing Vought’s interpretation was incorrect and would efficiently starve the firm.
Judge Davila concurred.
He found that Vought’s interpretation “irritates Congress’s intent to insulate the Bureau’s financing stream from this transparent screen of partisanship.”
The judge noted that Vought said publicly this previous October that he was working to “shut down the agency” and would achieve success within months.
In his judgment, Davila composed that Vought’s plan to close down the CFPB using “this clearly erroneous analysis” goes against what Congress meant when it developed the agency.
The court declared that Vought’s dependence on the legal viewpoint was “arbitrary, capricious and in infraction of law,” and bought the CFPB to keep requesting cash from the Federal Reserve as the law needs.
The CFPB was developed to oversee monetary items like home loans, charge card and payday loans. It manages customer problems and collects data on financing practices that groups use to track whether banks are appropriately serving their neighborhoods.
Without that financing, complainants argued, they would lose access to information they need to do their work.
The judge found that argument convincing, stating the groups had actually shown they would suffer “educational harm” if the CFPB lost financing.