Nearly two dozen Democratic state attorneys general are suing the Trump administration over its efforts to halt Consumer Financial Protection Bureau funding.
The coalition of 22 AGs, led by New York Attorney General Letitia James, allege that CFPB Acting Director Russ Vought’s refusal to accept money from the Federal Reserve will have the watchdog shut down next month.
“My office and attorneys general across the country rely on the CFPB for consumer complaints and other data to get justice for consumers,” James said in a prepared statement. “The administration’s actions are a handout to those who drive up costs by cheating hardworking Americans, and I will keep fighting to ensure they follow the law and our Constitution.”
The CFPB gets its funding from the Fed, rather than Congress, in what was presumably meant to shield the bureau from political influence. The Supreme Court upheld the agency’s funding structure last year, following challenges from trade groups. At issue now is that the agency gets its funding from the Fed’s “combined earnings,” which the Justice Department’s Office of Legal Counsel this fall has equated with “profits.”
Vought said, based on that interpretation, he can’t – and won’t – request funding from the Fed. By the DOJ’s logic, the Fed is not profitable and has no money to give the CFPB, Vought said.
The attorneys general, however, assert that definition of “combined earnings” runs afoul of the Dodd-Frank Act, which views “combined earnings” as “gross revenues of the Federal Reserve without any deduction for interest or other expenses.”
Vought’s decision not to re-up CFPB funding is unlawful and unconstitutional, the AGs argued.
States routinely refer consumer complaints to the CFPB for further assistance, according to James’ announcement. Since 2023, New York has referred roughly 2,170 complaint intakes to the CFPB, which acts as an “important resource for resolving complaints and securing justice for cheated consumers.”
“The CFPB has a legal obligation to provide states with consumer complaints – a duty it will not be able to fulfill without the necessary funds,” James’ announcement reads. “Completely eliminating CFPB funding also violates the Separation of Powers principle, as the agency was established by Congress, which also created a process for it to regularly receive funding from the Federal Reserve.”
James and the other AGs are asking the court to force Vought to request CFPB funds from the Fed to fulfill its legal obligations.
Since taking the agency’s top post this year, Vought has made numerous attempts to drastically reduce the agency. He has tried to fire 90% of CFPB’s workforce, though that effort is locked up in courts. In October, he projected the agency would shutter “in two to three months.” The CFPB has terminated several consent orders years early, and in November, it began transferring all of its cases to the DOJ.
Alongside James in the lawsuit are the attorneys general of Arizona, California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, North Carolina, Oregon, Rhode Island, Vermont, Wisconsin and Washington, D.C.
