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Capstone believes the Trump administration is intent on dismantling the Customer Financial Security Bureau (CFPB), even as the agencyconstrained by minimal budgets and staffingmoves forward with a broad deregulatory rulemaking program favorable to market. As federal enforcement and supervision decline, we anticipate well-resourced, Democratic-led states to action in, producing a fragmented and irregular regulative landscape.

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While the ultimate outcome of the litigation remains unidentified, it is clear that customer financing companies across the environment will benefit from minimized federal enforcement and supervisory dangers as the administration starves the agency of resources and appears devoted to reducing the bureau to a company on paper only. Because Russell Vought was called acting director of the firm, the bureau has dealt with litigation challenging various administrative choices meant to shutter it.

Vought also cancelled many mission-critical agreements, issued stop-work orders, and closed CFPB workplaces, to name a few actions. The CFPB chapter of the National Treasury Worker Union (NTEU) immediately challenged the actions. After evidentiary hearings, Judge Amy Berman Jackson of the US District Court for the District of Columbia provided an initial injunction pausing the decreases in force (RIFs) and other actions, holding that the CFPB was attempting to render itself functionally inoperable.

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DOJ and CFPB legal representatives acknowledged that removing the bureau would require an act of Congress which the CFPB stayed 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 choice in favor of the CFPB, partly abandoning Judge Berman Jackson's preliminary injunction that obstructed the bureau from carrying out mass RIFs, however remaining the choice pending appeal.

En banc hearings are seldom given, however we expect NTEU's demand to be authorized in this instance, given the detailed district court record, Judge Cornelia Pillard's lengthy 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 focused on closing the firm, the Trump administration aims to develop off budget cuts incorporated into the reconciliation bill passed in July to even more starve the CFPB of resources.

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

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In CFPB v. Community Financial Solutions Association of America, defendants argued the financing technique broke the Appropriations Provision of the Constitution. While the Fifth Circuit agreed, the US Supreme Court did not. In a 7-2 choice in May 2024, Justice Clarence Thomas' bulk opinion held the CFPB's funding approach constitutional. The Trump administration makes the technical legal argument that the CFPB can not legally demand funding from the Federal Reserve unless the Fed pays.

The technical legal argument was filed in November in the NTEU lawsuits. The CFPB said it would lack cash in early 2026 and could not lawfully request funding from the Fed, mentioning a memorandum opinion from the DOJ's Office of Legal Counsel (OLC). Utilizing the arguments made by accuseds in other CFPB lawsuits, the OLC's memorandum opinion translates the Dodd-Frank law, which permits the CFPB to draw funding from the "combined profits" of the Federal Reserve, to argue that "profits" imply "profit" rather than "profits." As a result, since the Fed has actually been performing at a loss, it does not have "combined incomes" from which the CFPB may lawfully draw funds.

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Appropriately, in early December, the CFPB followed up on its filing by corresponding to Trump and Congress stating that the agency required roughly $280 million to continue performing its statutorily mandated functions. In our view, the brand-new but repeating funding argument will likely be folded into the NTEU lawsuits.

Most customer financing companies; home mortgage lending institutions and servicers; vehicle lenders and servicers; fintechs; smaller customer reporting, financial obligation collection, remittance, and automobile financing companiesN/A We expect the CFPB to push strongly to execute an enthusiastic deregulatory program in 2026, in stress with the Trump administration's effort to starve the firm of resources.

In September 2025, the CFPB released its Spring 2025 Regulatory Program, with 24 rulemakings. The program follows the company's rescission of almost 70 interpretive rules, policy statements, circulars, and advisory opinions going back to the company's inception. Likewise, the bureau launched its 2025 supervision and enforcement priorities memorandum, which highlighted a shift in supervision back to depository organizations and mortgage lending institutions, an increased focus on areas such as scams, support for veterans and service members, and a narrower enforcement posture.

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We view the proposed guideline modifications as broadly beneficial to both consumer and small-business lending institutions, as they narrow potential liability and exposure to fair-lending scrutiny. Specifically relative to the Rohit Chopra-led CFPB throughout the Biden administration, we expect fair-lending supervision and enforcement to essentially disappear in 2026. Initially, a proposed guideline to narrow Equal Credit Opportunity Act (ECOA) guidelines intends to remove diverse impact claims and to narrow the scope of the discouragement arrangement that restricts creditors from making oral or written declarations intended to discourage a customer from getting credit.

The new proposal, which reporting suggests will be completed on an interim basis no behind early 2026, dramatically narrows the Biden-era rule to omit specific small-dollar loans from protection, lowers the threshold for what is considered a small company, and removes lots of information fields. The CFPB appears set to issue an updated open banking guideline in early 2026, with substantial implications for banks and other conventional financial organizations, fintechs, and data aggregators across the customer financing community.

The rule was settled in March 2024 and included tiered compliance dates based on the size of the banks, with the biggest required to begin compliance in April 2026. The last guideline was right away challenged in May 2024 by bank trade associations, which argued that the CFPB surpassed its statutory authority in providing the guideline, specifically targeting the restriction on costs as unlawful.

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The court provided a stay as CFPB reevaluated the guideline. In our view, the Vought-led bureau might consider allowing a "reasonable charge" or a similar standard to allow information service providers (e.g., banks) to recover expenses connected with providing the data while also narrowing the danger that fintechs and information aggregators are priced out of the market.

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We expect the CFPB to dramatically decrease its supervisory reach in 2026 by settling 4 larger participant (LP) guidelines that develop CFPB supervisory jurisdiction over non-bank covered persons in numerous end markets. The changes will benefit smaller sized operators in the consumer reporting, automobile finance, consumer debt collection, and global cash transfers markets.