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Capstone believes the Trump administration is intent on taking apart the Customer Financial Protection Bureau (CFPB), even as the agencyconstrained by limited budgets and staffingmoves forward with a broad deregulatory rulemaking agenda favorable to market. As federal enforcement and guidance decline, we expect well-resourced, Democratic-led states to step in, creating a fragmented and uneven regulatory landscape.

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While the ultimate result of the litigation stays unknown, it is clear that customer finance companies throughout the community will benefit from lowered federal enforcement and supervisory threats as the administration starves the firm of resources and appears dedicated to reducing the bureau to a company on paper just. Since Russell Vought was called acting director of the agency, the bureau has actually dealt with litigation challenging various administrative choices planned to shutter it.

Vought likewise cancelled various mission-critical contracts, provided stop-work orders, and closed CFPB offices, among other actions. The CFPB chapter of the National Treasury Employees Union (NTEU) right away challenged the actions. After evidentiary hearings, Judge Amy Berman Jackson of the United States District Court for the District of Columbia provided a preliminary injunction stopping briefly the reductions in force (RIFs) and other actions, holding that the CFPB was trying to render itself functionally unusable.

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DOJ and CFPB legal representatives acknowledged that removing the bureau would need an act of Congress and that the CFPB remained responsible for performing its statutorily needed functions under the Dodd-Frank Wall Street Reform and Customer Security Act. On August 15, 2025, the DC Circuit provided a 2-1 decision in favor of the CFPB, partially vacating Judge Berman Jackson's initial injunction that blocked the bureau from executing mass RIFs, but staying the choice pending appeal.

En banc hearings are hardly ever granted, however we expect NTEU's demand to be approved in this circumstances, offered the comprehensive district court record, Judge Cornelia Pillard's prolonged dissent on appeal, and more recent actions that signify the Trump administration plans to functionally close the CFPB. In addition to litigating the RIFs and other administrative actions aimed at closing the company, the Trump administration aims to build off budget cuts integrated into the reconciliation expense passed in July to even more starve the CFPB of resources.

Dodd-Frank insulates the CFPB from direct appropriations by Congress, rather authorizing it to demand funding straight from the Federal Reserve, with the quantity capped at a portion of the Fed's operating expenses, based on a yearly inflation change. The bureau's capability to bypass Congress has frequently stirred criticism from congressional Republicans, and, in the spirit of that ire, the reconciliation plan passed in July minimized the CFPB's funding from 12% of the Fed's operating costs to 6.5%.

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In CFPB v. Neighborhood Financial Solutions Association of America, defendants argued the funding method violated the Appropriations Clause of the Constitution. The Trump administration makes the technical legal argument that the CFPB can not legally request funding from the Federal Reserve unless the Fed is rewarding.

The technical legal argument was filed in November in the NTEU litigation. The CFPB stated it would lack cash in early 2026 and might not legally request financing from the Fed, citing a memorandum opinion from the DOJ's Office of Legal Counsel (OLC). Utilizing the arguments made by offenders in other CFPB litigation, the OLC's memorandum opinion translates the Dodd-Frank law, which permits the CFPB to draw financing from the "combined revenues" of the Federal Reserve, to argue that "earnings" mean "revenue" rather than "income." As a result, since the Fed has actually been performing at a loss, it does not have actually "integrated revenues" from which the CFPB might legally draw funds.

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Accordingly, in early December, the CFPB followed up on its filing by corresponding to Trump and Congress saying that the firm needed around $280 million to continue performing its statutorily mandated functions. In our view, the brand-new but recurring financing argument will likely be folded into the NTEU lawsuits.

The majority of customer financing business; mortgage lending institutions and servicers; auto lending institutions and servicers; fintechs; smaller customer reporting, financial obligation collection, remittance, and automobile finance companiesN/A We expect the CFPB to press strongly to carry out an enthusiastic deregulatory program in 2026, in stress with the Trump administration's effort to starve the company of resources.

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

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We view the proposed rule changes as broadly favorable to both consumer and small-business lenders, as they narrow potential liability and direct exposure to fair-lending scrutiny. Particularly relative to the Rohit Chopra-led CFPB throughout the Biden administration, we anticipate fair-lending supervision and enforcement to essentially vanish in 2026. A proposed rule to narrow Equal Credit Opportunity Act (ECOA) guidelines aims to get rid of disparate impact claims and to narrow the scope of the discouragement provision that prohibits creditors from making oral or written declarations planned to dissuade a customer from applying for credit.

The brand-new proposition, which reporting recommends will be finalized on an interim basis no later than early 2026, considerably narrows the Biden-era rule to leave out specific small-dollar loans from coverage, reduces the threshold for what is considered a little service, and gets rid of many data fields. The CFPB appears set to provide an upgraded open banking guideline in early 2026, with considerable implications for banks and other traditional financial institutions, fintechs, and information aggregators across the consumer financing environment.

The rule was settled in March 2024 and included tiered compliance dates based on the size of the banks, with the biggest needed to begin compliance in April 2026. The last rule was immediately challenged in May 2024 by bank trade associations, which argued that the CFPB exceeded its statutory authority in releasing the rule, particularly targeting the prohibition on costs as illegal.

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The court issued a stay as CFPB reevaluated the guideline. In our view, the Vought-led bureau might think about permitting a "sensible fee" or a similar standard to allow information service providers (e.g., banks) to recover expenses connected with supplying the information while also narrowing the threat that fintechs and data aggregators are evaluated of the market.

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We expect the CFPB to drastically reduce its supervisory reach in 2026 by settling four larger individual (LP) rules that develop CFPB supervisory jurisdiction over non-bank covered persons in different end markets. The modifications will benefit smaller sized operators in the consumer reporting, automobile finance, customer financial obligation collection, and international cash transfers markets.