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Capstone believes the Trump administration is intent on taking apart the Customer Financial Security Bureau (CFPB), even as the agencyconstrained by limited budget plans and staffingmoves forward with a broad deregulatory rulemaking agenda beneficial to industry. As federal enforcement and supervision recede, we expect well-resourced, Democratic-led states to step in, creating a fragmented and irregular regulative landscape.

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While the ultimate outcome of the litigation remains unknown, it is clear that customer finance companies across the environment will take advantage of reduced federal enforcement and supervisory threats as the administration starves the company of resources and appears committed to reducing the bureau to a firm on paper only. Given That Russell Vought was named acting director of the company, the bureau has dealt with litigation challenging various administrative decisions meant to shutter it.

Vought likewise cancelled many mission-critical contracts, released stop-work orders, and closed CFPB workplaces, to name a few actions. The CFPB chapter of the National Treasury Employees Union (NTEU) immediately challenged the actions. After evidentiary hearings, Judge Amy Berman Jackson of the US District Court for the District of Columbia issued a preliminary injunction stopping briefly 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 legal representatives acknowledged that eliminating the bureau would require 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 Defense Act. On August 15, 2025, the DC Circuit released a 2-1 decision in favor of the CFPB, partially abandoning Judge Berman Jackson's preliminary injunction that blocked the bureau from implementing mass RIFs, but remaining the decision pending appeal.

En banc hearings are rarely given, however we expect NTEU's demand to be authorized in this circumstances, provided the detailed district court record, Judge Cornelia Pillard's prolonged 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 intended at closing the firm, the Trump administration aims to develop off budget 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, rather licensing it to demand financing straight from the Federal Reserve, with the amount capped at a portion of the Fed's business expenses, based on a yearly inflation change. The bureau's capability to bypass Congress has regularly stirred criticism from congressional Republicans, and, in the spirit of that ire, the reconciliation plan passed in July reduced the CFPB's financing from 12% of the Fed's operating costs to 6.5%.

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In CFPB v. Community Financial Services Association of America, accuseds argued the funding method violated the Appropriations Stipulation of the Constitution. The Trump administration makes the technical legal argument that the CFPB can not legally demand funding from the Federal Reserve unless the Fed is rewarding.

The technical legal argument was filed in November in the NTEU litigation. The CFPB said it would run out of money in early 2026 and could not legally demand financing from the Fed, pointing out a memorandum viewpoint from the DOJ's Workplace of Legal Counsel (OLC). Utilizing the arguments made by accuseds in other CFPB litigation, the OLC's memorandum viewpoint translates the Dodd-Frank law, which allows the CFPB to draw financing from the "combined incomes" of the Federal Reserve, to argue that "profits" mean "earnings" as opposed to "income." As a result, due to the fact that the Fed has been performing at a loss, it does not have "combined revenues" from which the CFPB may legally draw funds.

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

A lot of customer finance business; home mortgage loan providers and servicers; auto lending institutions and servicers; fintechs; smaller sized customer reporting, debt collection, remittance, and automobile finance companiesN/A We expect the CFPB to press strongly to implement an ambitious deregulatory program in 2026, in tension with the Trump administration's effort to starve the firm of resources.

In September 2025, the CFPB released its Spring 2025 Regulatory Agenda, with 24 rulemakings. The program follows the agency's rescission of almost 70 interpretive guidelines, policy statements, circulars, and advisory opinions going back to the company's beginning. Similarly, the bureau launched its 2025 guidance and enforcement top priorities memorandum, which highlighted a shift in supervision back to depository organizations and home loan loan providers, an increased focus on locations such as scams, support for veterans and service members, and a narrower enforcement posture.

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We see the proposed guideline changes as broadly favorable to both customer and small-business loan providers, as they narrow prospective liability and direct exposure to fair-lending analysis. Especially relative to the Rohit Chopra-led CFPB throughout the Biden administration, we anticipate fair-lending guidance and enforcement to virtually vanish in 2026. First, a proposed rule to narrow Equal Credit Opportunity Act (ECOA) regulations aims to get rid of disparate impact claims and to narrow the scope of the frustration provision that forbids lenders from making oral or written declarations intended to dissuade a customer from getting credit.

The brand-new proposition, which reporting recommends will be completed on an interim basis no later on than early 2026, drastically narrows the Biden-era rule to exclude specific small-dollar loans from coverage, reduces the limit for what is considered a small company, and eliminates lots of data fields. The CFPB appears set to provide an updated open banking guideline in early 2026, with considerable ramifications for banks and other standard financial institutions, fintechs, and information aggregators throughout the consumer finance ecosystem.

The guideline was completed in March 2024 and consisted of tiered compliance dates based on the size of the banks, with the largest needed to start compliance in April 2026. The last rule was right away challenged in May 2024 by bank trade associations, which argued that the CFPB exceeded its statutory authority in issuing the guideline, specifically targeting the prohibition on fees as illegal.

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The court issued a stay as CFPB reassessed the rule. In our view, the Vought-led bureau may consider permitting a "sensible fee" or a similar standard to allow information service providers (e.g., banks) to recoup costs associated with providing the data while likewise narrowing the risk that fintechs and data aggregators are priced out of the market.

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We anticipate the CFPB to drastically lower its supervisory reach in 2026 by settling 4 larger individual (LP) guidelines that develop CFPB supervisory jurisdiction over non-bank covered persons in various end markets. The modifications will benefit smaller operators in the consumer reporting, auto financing, customer financial obligation collection, and global money transfers markets.