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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 minimal budgets and staffingmoves forward with a broad deregulatory rulemaking program favorable to industry. As federal enforcement and supervision recede, we expect well-resourced, Democratic-led states to action in, producing a fragmented and irregular regulatory landscape.

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While the ultimate outcome of the litigation remains unidentified, it is clear that customer finance business across the environment will take advantage of minimized federal enforcement and supervisory dangers as the administration starves the company of resources and appears committed to minimizing the bureau to an agency on paper just. Given That Russell Vought was called acting director of the firm, the bureau has actually dealt with litigation challenging numerous administrative choices planned to shutter it.

Vought also cancelled many mission-critical contracts, released stop-work orders, and closed CFPB offices, amongst other actions. The CFPB chapter of the National Treasury Worker Union (NTEU) instantly challenged the actions. After evidentiary hearings, Judge Amy Berman Jackson of the United States District Court for the District of Columbia issued an initial injunction pausing the reductions in force (RIFs) and other actions, holding that the CFPB was trying to render itself functionally inoperable.

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DOJ and CFPB attorneys acknowledged that removing the bureau would require an act of Congress which the CFPB remained responsible for performing its statutorily required functions under the Dodd-Frank Wall Street Reform and Consumer Security Act. On August 15, 2025, the DC Circuit released 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, but staying the decision pending appeal.

En banc hearings are rarely approved, 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 means to functionally close the CFPB. In addition to prosecuting the RIFs and other administrative actions focused on closing the firm, the Trump administration aims to build off spending plan cuts integrated 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 licensing it to demand financing straight from the Federal Reserve, with the amount capped at a percentage of the Fed's business expenses, based on an annual 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 lowered the CFPB's financing from 12% of the Fed's operating expenses to 6.5%.

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In CFPB v. Neighborhood Financial Services Association of America, offenders argued the financing approach violated the Appropriations Stipulation of the Constitution. While the Fifth Circuit concurred, the US Supreme Court did not. In a 7-2 choice in May 2024, Justice Clarence Thomas' majority opinion held the CFPB's financing approach constitutional. The Trump administration makes the technical legal argument that the CFPB can not lawfully request financing from the Federal Reserve unless the Fed pays.

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

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

Many consumer finance business; home loan lending institutions and servicers; auto lenders and servicers; fintechs; smaller customer reporting, debt collection, remittance, and car finance companiesN/A We anticipate the CFPB to push aggressively to execute an ambitious deregulatory agenda in 2026, in tension with the Trump administration's effort to starve the firm of resources.

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

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We see the proposed rule modifications as broadly beneficial to both consumer and small-business lending institutions, as they narrow possible liability and 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 essentially vanish in 2026. A proposed rule to narrow Equal Credit Opportunity Act (ECOA) guidelines intends to remove disparate effect claims and to narrow the scope of the discouragement arrangement that forbids creditors from making oral or written declarations planned to discourage a consumer from using for credit.

The new proposal, which reporting suggests will be finalized on an interim basis no behind early 2026, significantly narrows the Biden-era guideline to leave out specific small-dollar loans from protection, decreases the limit for what is considered a small service, and removes many information fields. The CFPB appears set to issue an upgraded open banking guideline in early 2026, with significant ramifications for banks and other traditional banks, fintechs, and information aggregators across the consumer financing community.

The guideline was settled in March 2024 and included tiered compliance dates based on the size of the monetary organization, with the largest needed to start compliance in April 2026. The last guideline was immediately challenged in Might 2024 by bank trade associations, which argued that the CFPB surpassed its statutory authority in releasing the rule, particularly targeting the prohibition on charges as unlawful.

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The court released a stay as CFPB reevaluated the guideline. In our view, the Vought-led bureau might think about permitting a "affordable fee" or a comparable standard to enable information service providers (e.g., banks) to recover expenses related to providing the information while likewise narrowing the threat that fintechs and data aggregators are priced out of the marketplace.

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We expect the CFPB to considerably lower its supervisory reach in 2026 by completing four bigger individual (LP) guidelines that develop CFPB supervisory jurisdiction over non-bank covered individuals in various end markets. The changes will benefit smaller sized operators in the customer reporting, car finance, customer financial obligation collection, and worldwide money transfers markets.