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Capstone believes the Trump administration is intent on taking apart the Consumer Financial Security Bureau (CFPB), even as the agencyconstrained by minimal budget plans and staffingmoves forward with a broad deregulatory rulemaking program beneficial to industry. As federal enforcement and guidance recede, we anticipate well-resourced, Democratic-led states to action in, creating a fragmented and irregular regulative landscape.

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While the ultimate outcome of the lawsuits stays unknown, it is clear that consumer finance business throughout the ecosystem will gain from reduced federal enforcement and supervisory risks as the administration starves the company of resources and appears committed to reducing the bureau to a company on paper just. Given That Russell Vought was named acting director of the firm, the bureau has dealt with litigation challenging numerous administrative choices meant to shutter it.

Vought also cancelled numerous mission-critical contracts, released stop-work orders, and closed CFPB workplaces, to name a few actions. The CFPB chapter of the National Treasury Employees Union (NTEU) immediately 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 stopping briefly 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 lawyers acknowledged that removing the bureau would need an act of Congress and that 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 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 hardly ever given, but we expect NTEU's request to be authorized in this instance, given the in-depth district court record, Judge Cornelia Pillard's lengthy dissent on appeal, and more current actions that indicate the Trump administration means to functionally close the CFPB. In addition to prosecuting the RIFs and other administrative actions targeted at closing the firm, the Trump administration aims to develop off budget plan cuts included into the reconciliation expense passed in July to further starve the CFPB of resources.

Dodd-Frank insulates the CFPB from direct appropriations by Congress, instead licensing it to request funding straight from the Federal Reserve, with the amount topped at a percentage of the Fed's operating costs, based on an annual inflation change. The bureau's ability to bypass Congress has actually 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 business expenses to 6.5%.

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In CFPB v. Neighborhood Financial Providers Association of America, offenders argued the funding technique broke the Appropriations Stipulation of the Constitution. The Trump administration makes the technical legal argument that the CFPB can not legally request funding from the Federal Reserve unless the Fed is rewarding.

The technical legal argument was filed in November in the NTEU lawsuits. The CFPB said it would run out of money in early 2026 and could not lawfully request funding from the Fed, citing a memorandum viewpoint from the DOJ's Office of Legal Counsel (OLC). Utilizing the arguments made by offenders in other CFPB litigation, the OLC's memorandum viewpoint translates the Dodd-Frank law, which allows the CFPB to draw funding from the "combined profits" of the Federal Reserve, to argue that "incomes" imply "profit" instead of "income." As a result, since the Fed has been running at a loss, it does not have "combined revenues" from which the CFPB might legally draw funds.

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Accordingly, in early December, the CFPB followed up on its filing by corresponding to Trump and Congress stating that the company needed roughly $280 million to continue performing its statutorily mandated functions. In our view, the new however repeating financing argument will likely be folded into the NTEU litigation.

The majority of consumer finance companies; home loan lending institutions and servicers; automobile loan providers and servicers; fintechs; smaller customer reporting, financial obligation collection, remittance, and vehicle finance companiesN/A We anticipate the CFPB to press aggressively to execute an ambitious deregulatory agenda 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 agenda follows the agency's rescission of nearly 70 interpretive rules, policy declarations, circulars, and advisory opinions going back to the agency's inception. Similarly, the bureau launched its 2025 supervision and enforcement concerns memorandum, which highlighted a shift in supervision back to depository organizations and mortgage loan providers, an increased focus on locations such as scams, support for veterans and service members, and a narrower enforcement posture.

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We view the proposed guideline modifications as broadly favorable to both customer and small-business loan providers, as they narrow prospective liability and exposure to fair-lending analysis. Especially 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 guideline to narrow Equal Credit Opportunity Act (ECOA) regulations aims to remove disparate effect claims and to narrow the scope of the frustration arrangement that restricts creditors from making oral or written statements intended 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 exclude specific small-dollar loans from coverage, reduces the limit for what is thought about a small company, and gets rid of lots of information fields. The CFPB appears set to release an updated open banking rule in early 2026, with considerable ramifications for banks and other traditional monetary organizations, fintechs, and data aggregators across the customer finance ecosystem.

The guideline was settled in March 2024 and consisted of tiered compliance dates based on the size of the banks, with the biggest needed to start compliance in April 2026. The last guideline was right away challenged in May 2024 by bank trade associations, which argued that the CFPB exceeded its statutory authority in providing the rule, particularly targeting the prohibition on charges as illegal.

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The court provided a stay as CFPB reevaluated the guideline. In our view, the Vought-led bureau might consider allowing a "reasonable fee" or a comparable requirement to allow data providers (e.g., banks) to recover expenses connected with providing the information while also narrowing the danger that fintechs and data aggregators are priced out of the marketplace.

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We expect the CFPB to drastically lower its supervisory reach in 2026 by settling 4 larger individual (LP) rules that establish CFPB supervisory jurisdiction over non-bank covered individuals in various end markets. The changes will benefit smaller sized operators in the consumer reporting, car financing, customer financial obligation collection, and worldwide cash transfers markets.