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Capstone believes the Trump administration is intent on dismantling the Customer Financial Protection Bureau (CFPB), even as the agencyconstrained by minimal budget plans and staffingmoves forward with a broad deregulatory rulemaking agenda beneficial to market. As federal enforcement and guidance recede, we expect well-resourced, Democratic-led states to action in, creating a fragmented and uneven regulatory landscape.

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While the ultimate result of the lawsuits remains unknown, it is clear that consumer finance business across the community will benefit from minimized federal enforcement and supervisory risks as the administration starves the company of resources and appears committed to lowering the bureau to an agency on paper only. Because Russell Vought was named acting director of the company, the bureau has actually dealt with litigation challenging various administrative choices meant to shutter it.

Vought likewise cancelled various mission-critical agreements, released stop-work orders, and closed CFPB workplaces, amongst other actions. The CFPB chapter of the National Treasury Personnel Union (NTEU) instantly challenged the actions. After evidentiary hearings, Judge Amy Berman Jackson of the US District Court for the District of Columbia released an initial 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 attorneys acknowledged that eliminating the bureau would need an act of Congress and that 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 issued a 2-1 choice in favor of the CFPB, partly vacating Judge Berman Jackson's preliminary injunction that obstructed the bureau from executing mass RIFs, but staying the decision pending appeal.

En banc hearings are seldom approved, but we anticipate NTEU's request to be authorized in this instance, offered the in-depth district court record, Judge Cornelia Pillard's prolonged dissent on appeal, and more recent actions that signify the Trump administration means to functionally close the CFPB. In addition to litigating the RIFs and other administrative actions intended at closing the agency, the Trump administration intends to develop off budget cuts integrated into the reconciliation costs 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 request financing straight from the Federal Reserve, with the quantity capped at a percentage of the Fed's operating costs, based on a yearly inflation change. The bureau's capability to bypass Congress has routinely stirred criticism from congressional Republicans, and, in the spirit of that ire, the reconciliation plan 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 Providers Association of America, defendants argued the funding approach violated the Appropriations Stipulation of the Constitution. The Trump administration makes the technical legal argument that the CFPB can not legally request financing from the Federal Reserve unless the Fed is profitable.

The CFPB said it would run out of money in early 2026 and might not legally request financing from the Fed, citing a memorandum viewpoint from the DOJ's Office of Legal Counsel (OLC). As a result, due to the fact that the Fed has been running at a loss, it does not have actually "combined revenues" from which the CFPB may legally draw funds.

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

The majority of consumer financing business; home mortgage lenders and servicers; vehicle loan providers and servicers; fintechs; smaller sized customer reporting, debt collection, remittance, and automobile finance 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 company of resources.

In September 2025, the CFPB released its Spring 2025 Regulatory Agenda, with 24 rulemakings. The program follows the company's rescission of almost 70 interpretive rules, policy declarations, circulars, and advisory opinions going back to the agency's beginning. Similarly, the bureau released its 2025 supervision and enforcement priorities memorandum, which highlighted a shift in supervision back to depository organizations and mortgage lending institutions, an increased concentrate 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 modifications as broadly favorable to both customer and small-business lenders, as they narrow prospective liability and exposure to fair-lending scrutiny. Specifically relative to the Rohit Chopra-led CFPB during the Biden administration, we anticipate fair-lending supervision and enforcement to practically disappear in 2026. First, a proposed rule to narrow Equal Credit Chance Act (ECOA) regulations aims to eliminate disparate impact claims and to narrow the scope of the frustration provision that forbids creditors from making oral or written declarations meant to dissuade a consumer from getting credit.

The brand-new proposal, which reporting suggests will be settled on an interim basis no behind early 2026, considerably narrows the Biden-era rule to leave out specific small-dollar loans from protection, lowers the threshold for what is thought about a small company, and eliminates numerous data fields. The CFPB appears set to issue an upgraded open banking guideline in early 2026, with substantial ramifications for banks and other standard financial institutions, fintechs, and information aggregators across the customer financing environment.

The rule was settled in March 2024 and consisted of tiered compliance dates based on the size of the banks, with the largest needed to begin compliance in April 2026. The final rule was immediately challenged in Might 2024 by bank trade associations, which argued that the CFPB surpassed its statutory authority in providing the rule, particularly targeting the prohibition on costs as unlawful.

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The court provided a stay as CFPB reevaluated the rule. In our view, the Vought-led bureau may think about allowing a "sensible cost" or a comparable requirement to make it possible for data providers (e.g., banks) to recover expenses related to offering the information while likewise narrowing the danger that fintechs and data aggregators are priced out of the marketplace.

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We anticipate the CFPB to significantly minimize its supervisory reach in 2026 by completing 4 larger individual (LP) rules that establish CFPB supervisory jurisdiction over non-bank covered individuals in different end markets. The changes will benefit smaller sized operators in the consumer reporting, car financing, consumer debt collection, and global money transfers markets.