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Capstone thinks the Trump administration is intent on taking apart the Customer Financial Protection Bureau (CFPB), even as the agencyconstrained by minimal budget plans and staffingmoves forward with a broad deregulatory rulemaking agenda favorable to market. As federal enforcement and supervision recede, we expect well-resourced, Democratic-led states to action in, creating a fragmented and unequal regulative landscape.

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While the ultimate result of the litigation stays unknown, it is clear that customer finance business throughout the ecosystem will take advantage of minimized federal enforcement and supervisory threats as the administration starves the company of resources and appears devoted to decreasing the bureau to an agency on paper only. Because Russell Vought was named acting director of the firm, the bureau has actually faced litigation challenging different administrative choices planned to shutter it.

Vought likewise cancelled various mission-critical agreements, released stop-work orders, and closed CFPB workplaces, to name a few actions. The CFPB chapter of the National Treasury Worker Union (NTEU) instantly 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 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 getting rid of the bureau would need an act of Congress which the CFPB remained 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 provided a 2-1 decision in favor of the CFPB, partially abandoning Judge Berman Jackson's initial injunction that obstructed the bureau from implementing mass RIFs, however staying the decision pending appeal.

En banc hearings are seldom granted, but we expect NTEU's demand to be authorized in this circumstances, given the comprehensive district court record, Judge Cornelia Pillard's prolonged dissent on appeal, and more recent actions that signal the Trump administration intends to functionally close the CFPB. In addition to prosecuting the RIFs and other administrative actions intended at closing the firm, the Trump administration intends to construct off budget plan cuts integrated into the reconciliation bill passed in July to further starve the CFPB of resources.

Dodd-Frank insulates the CFPB from direct appropriations by Congress, rather licensing it to request funding directly from the Federal Reserve, with the quantity capped at a percentage of the Fed's operating costs, based on an annual inflation adjustment. The bureau's capability to bypass Congress has routinely stirred criticism from congressional Republicans, and, in the spirit of that ire, the reconciliation bundle passed in July decreased the CFPB's financing from 12% of the Fed's business expenses to 6.5%.

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In CFPB v. Neighborhood Financial Solutions Association of America, offenders argued the financing technique breached the Appropriations Clause of the Constitution. The Trump administration makes the technical legal argument that the CFPB can not lawfully demand financing from the Federal Reserve unless the Fed is rewarding.

The CFPB said it would run out of cash in early 2026 and might not lawfully request funding from the Fed, mentioning a memorandum opinion from the DOJ's Workplace of Legal Counsel (OLC). As an outcome, since the Fed has been running at a loss, it does not have "combined incomes" from which the CFPB might legally draw funds.

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Appropriately, in early December, the CFPB followed up on its filing by sending out letters 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 recurring funding argument will likely be folded into the NTEU litigation.

A lot of customer financing business; mortgage loan providers and servicers; auto lenders and servicers; fintechs; smaller sized consumer reporting, financial obligation collection, remittance, and vehicle financing companiesN/A We anticipate the CFPB to press aggressively to execute an ambitious 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 agenda follows the firm's rescission of almost 70 interpretive rules, policy statements, circulars, and advisory opinions dating back to the agency's creation. The bureau launched its 2025 guidance and enforcement priorities memorandum, which highlighted a shift in guidance 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 see the proposed rule changes as broadly beneficial to both customer and small-business loan providers, as they narrow potential liability and direct exposure to fair-lending scrutiny. Specifically relative to the Rohit Chopra-led CFPB during the Biden administration, we expect fair-lending supervision and enforcement to essentially disappear in 2026. First, a proposed rule to narrow Equal Credit Opportunity Act (ECOA) regulations intends to remove diverse impact claims and to narrow the scope of the discouragement provision that forbids financial institutions from making oral or written statements meant to dissuade a consumer from making an application for credit.

The brand-new proposal, which reporting recommends will be settled on an interim basis no later on than early 2026, dramatically narrows the Biden-era guideline to omit specific small-dollar loans from coverage, lowers the threshold for what is thought about a small company, and removes lots of information fields. The CFPB appears set to issue an updated open banking guideline in early 2026, with significant ramifications for banks and other standard financial organizations, fintechs, and information aggregators across the customer finance community.

The rule was settled in March 2024 and consisted of tiered compliance dates based on the size of the banks, with the largest required 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 issuing the guideline, specifically targeting the restriction on costs as illegal.

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The court provided a stay as CFPB reconsidered the rule. In our view, the Vought-led bureau may think about allowing a "reasonable fee" or a comparable standard to allow information suppliers (e.g., banks) to recoup costs associated with supplying the information while likewise narrowing the risk that fintechs and information aggregators are evaluated of the market.

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We anticipate the CFPB to dramatically minimize its supervisory reach in 2026 by completing four larger participant (LP) rules that establish CFPB supervisory jurisdiction over non-bank covered individuals in various end markets. The modifications will benefit smaller operators in the consumer reporting, auto finance, consumer financial obligation collection, and global cash transfers markets.