Trump administration must fund CFPB, judge says

A federal judge on Tuesday rejected President Donald Trump’s administration’s argument that the agency is legally barred from funding the U.S. Consumer Financial Protection Bureau, noting that a court order already prohibits the administration from shutting down the agency.

U.S. District Judge Amy Berman Jackson’s ruling comes as the CFPB faces an impending depletion of funding. The Trump administration has refused to provide additional funding to the CFPB since taking control of it in February.

Officials say cash reserves could run out in early 2026. CFPB representatives did not respond to requests for comment.

Supporters of the agency argue that without it, the public would be more exposed to predatory lending practices, fraud and other abuses. Mr. Trump and others have denounced it as politicized enforcement and called it a burden on free enterprise.

The agency was established after the 2008 financial crisis to protect consumers of financial services. Last month, the agency issued an administrative legal opinion stating that under the CFPB’s governing laws, the central bank cannot seek additional funds from the Federal Reserve as long as it is losing money.

In a ruling Tuesday, Judge Berman Jackson rejected this as a results-oriented inference with no legal basis and said it violates a March injunction that blocked the government shutdown as long as the case is heard in court.

“Defendants’ new understanding of ‘total revenue’ appears to be an unsubstantiated and transparent attempt to accomplish the very purpose the court’s injunction was designed to prevent,” she wrote, adding that the administration’s “unilateral decision” to deny further funding from the CFPB is therefore a violation.

Unlike many federal agencies, the CFPB is funded by the Federal Reserve System rather than by a budget set annually by Congress. But the CFPB could face tighter funding constraints anyway, as lawmakers reduced the CFPB’s allowable funding cap this year.