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Capstone believes the Trump administration is intent on taking apart the Consumer Financial Protection Bureau (CFPB), even as the agencyconstrained by limited spending plans and staffingmoves forward with a broad deregulatory rulemaking program favorable to industry. As federal enforcement and guidance decline, we anticipate well-resourced, Democratic-led states to action in, developing a fragmented and uneven regulatory landscape.

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While the ultimate outcome of the lawsuits remains unknown, it is clear that consumer finance business across the ecosystem will take advantage of reduced federal enforcement and supervisory risks as the administration starves the agency of resources and appears dedicated to minimizing the bureau to a firm on paper only. Given That Russell Vought was named acting director of the firm, the bureau has actually faced litigation challenging various administrative choices meant to shutter it.

Vought also cancelled various mission-critical agreements, released stop-work orders, and closed CFPB offices, to name a few actions. The CFPB chapter of the National Treasury Worker Union (NTEU) right away 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 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 stayed accountable for performing its statutorily needed functions under the Dodd-Frank Wall Street Reform and Consumer Defense Act. On August 15, 2025, the DC Circuit released a 2-1 decision in favor of the CFPB, partially leaving Judge Berman Jackson's preliminary injunction that blocked the bureau from carrying out mass RIFs, however remaining the decision pending appeal.

En banc hearings are hardly ever approved, but we expect NTEU's demand to be approved in this instance, given the comprehensive district court record, Judge Cornelia Pillard's lengthy dissent on appeal, and more current actions that signify the Trump administration intends to functionally close the CFPB. In addition to litigating the RIFs and other administrative actions focused on closing the agency, the Trump administration aims to develop off spending plan 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, rather licensing it to request funding straight from the Federal Reserve, with the amount capped at a percentage of the Fed's operating costs, subject to an annual 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 package passed in July minimized the CFPB's funding from 12% of the Fed's operating expenses to 6.5%.

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In CFPB v. Community Financial Providers Association of America, offenders argued the funding approach broke the Appropriations Clause 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 successful.

The technical legal argument was filed in November in the NTEU lawsuits. The CFPB stated it would lack cash in early 2026 and could not lawfully demand financing from the Fed, mentioning a memorandum viewpoint from the DOJ's Office of Legal Counsel (OLC). Using the arguments made by accuseds in other CFPB litigation, the OLC's memorandum viewpoint interprets the Dodd-Frank law, which permits the CFPB to draw financing from the "combined earnings" of the Federal Reserve, to argue that "profits" suggest "revenue" as opposed to "revenue." As a result, because the Fed has actually been running at a loss, it does not have "integrated incomes" from which the CFPB may lawfully draw funds.

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Appropriately, in early December, the CFPB acted on its filing by sending out letters to Trump and Congress stating that the agency required around $280 million to continue performing its statutorily mandated functions. In our view, the new however repeating funding argument will likely be folded into the NTEU litigation.

The majority of consumer financing business; mortgage loan providers and servicers; auto lending institutions and servicers; fintechs; smaller consumer reporting, financial obligation collection, remittance, and auto finance companiesN/A We anticipate the CFPB to push strongly to implement 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 Agenda, with 24 rulemakings. The agenda follows the firm's rescission of nearly 70 interpretive rules, policy statements, circulars, and advisory opinions going back to the firm's creation. Similarly, the bureau launched its 2025 guidance and enforcement priorities memorandum, which highlighted a shift in supervision back to depository organizations and home mortgage loan providers, an increased focus on locations such as fraud, assistance 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 customer and small-business lenders, as they narrow prospective liability and direct exposure to fair-lending scrutiny. Particularly relative to the Rohit Chopra-led CFPB during the Biden administration, we anticipate fair-lending guidance and enforcement to practically vanish in 2026. Initially, a proposed guideline to narrow Equal Credit Chance Act (ECOA) guidelines intends to get rid of disparate effect claims and to narrow the scope of the frustration arrangement that forbids lenders from making oral or written declarations intended to discourage a customer from requesting credit.

The new proposal, which reporting suggests will be finalized on an interim basis no later than early 2026, dramatically narrows the Biden-era rule to exclude certain small-dollar loans from protection, reduces the threshold for what is thought about a small company, and eliminates many data fields. The CFPB appears set to release an upgraded open banking guideline in early 2026, with substantial ramifications for banks and other traditional financial organizations, fintechs, and information aggregators across the customer finance ecosystem.

The rule was finalized in March 2024 and consisted of tiered compliance dates based upon the size of the financial organization, with the largest needed to begin compliance in April 2026. The last guideline was right away challenged in Might 2024 by bank trade associations, which argued that the CFPB exceeded its statutory authority in providing the guideline, specifically targeting the prohibition on fees 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 permitting a "affordable charge" or a comparable standard to allow information providers (e.g., banks) to recover costs associated with providing the information while likewise narrowing the danger that fintechs and information aggregators are evaluated of the marketplace.

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We expect the CFPB to drastically minimize its supervisory reach in 2026 by completing four bigger individual (LP) rules that establish CFPB supervisory jurisdiction over non-bank covered persons in numerous end markets. The modifications will benefit smaller sized operators in the consumer reporting, auto financing, consumer financial obligation collection, and international cash transfers markets.