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Capstone believes the Trump administration is intent on dismantling the Consumer Financial Security Bureau (CFPB), even as the agencyconstrained by limited budgets and staffingmoves forward with a broad deregulatory rulemaking program beneficial to market. As federal enforcement and guidance decline, we anticipate well-resourced, Democratic-led states to action in, creating a fragmented and unequal regulative landscape.

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While the supreme outcome of the lawsuits remains unidentified, it is clear that customer finance companies across the environment will take advantage of lowered federal enforcement and supervisory risks as the administration starves the firm of resources and appears committed to lowering the bureau to an agency on paper only. Given That Russell Vought was named acting director of the agency, the bureau has actually dealt with litigation challenging numerous administrative decisions intended to shutter it.

Vought also cancelled many mission-critical agreements, provided stop-work orders, and closed CFPB workplaces, to name a few actions. The CFPB chapter of the National Treasury Worker Union (NTEU) immediately challenged the actions. After evidentiary hearings, Judge Amy Berman Jackson of the United States District Court for the District of Columbia released a preliminary injunction pausing the decreases 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 eliminating the bureau would need an act of Congress which the CFPB stayed accountable for performing its statutorily needed functions under the Dodd-Frank Wall Street Reform and Consumer Security Act. On August 15, 2025, the DC Circuit provided a 2-1 choice in favor of the CFPB, partially abandoning Judge Berman Jackson's initial injunction that blocked the bureau from carrying out mass RIFs, but staying the decision pending appeal.

En banc hearings are hardly ever approved, but we expect NTEU's demand to be approved in this instance, given the detailed 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 litigating the RIFs and other administrative actions focused on closing the firm, the Trump administration aims to build off budget cuts integrated 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 financing directly from the Federal Reserve, with the quantity capped at a percentage of the Fed's operating costs, based on an annual inflation change. The bureau's ability 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 operating costs to 6.5%.

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

The technical legal argument was submitted in November in the NTEU lawsuits. The CFPB stated it would lack cash in early 2026 and could not lawfully request financing from the Fed, pointing out a memorandum opinion from the DOJ's Office of Legal Counsel (OLC). Utilizing the arguments made by defendants in other CFPB litigation, the OLC's memorandum viewpoint analyzes the Dodd-Frank law, which allows the CFPB to draw funding from the "combined earnings" of the Federal Reserve, to argue that "profits" mean "earnings" instead of "earnings." As an outcome, because the Fed has actually been performing at a loss, it does not have actually "integrated earnings" from which the CFPB may legally draw funds.

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Appropriately, in early December, the CFPB acted on its filing by sending out letters to Trump and Congress saying that the company required around $280 million to continue performing its statutorily mandated functions. In our view, the brand-new but recurring financing argument will likely be folded into the NTEU litigation.

Many customer financing companies; mortgage lending institutions and servicers; car loan providers and servicers; fintechs; smaller sized consumer reporting, debt collection, remittance, and vehicle financing companiesN/A We anticipate the CFPB to push strongly to carry out an enthusiastic deregulatory program in 2026, in stress with the Trump administration's effort to starve the agency of resources.

In September 2025, the CFPB published its Spring 2025 Regulatory Agenda, with 24 rulemakings. The program follows the agency's rescission of almost 70 interpretive rules, policy declarations, circulars, and advisory opinions dating back to the company's creation. The bureau launched its 2025 guidance and enforcement top priorities memorandum, which highlighted a shift in supervision back to depository organizations and home mortgage lending institutions, an increased focus on areas such as fraud, assistance for veterans and service members, and a narrower enforcement posture.

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We view the proposed guideline changes as broadly favorable to both customer and small-business lending institutions, as they narrow possible liability and direct exposure to fair-lending analysis. Particularly relative to the Rohit Chopra-led CFPB during the Biden administration, we anticipate fair-lending supervision and enforcement to essentially vanish in 2026. First, a proposed rule to narrow Equal Credit Chance Act (ECOA) regulations aims to get rid of diverse effect claims and to narrow the scope of the frustration provision that restricts creditors from making oral or written declarations meant to dissuade a customer from requesting credit.

The new proposal, which reporting recommends will be completed on an interim basis no behind early 2026, dramatically narrows the Biden-era rule to exclude specific small-dollar loans from coverage, reduces the limit for what is thought about a small company, and removes numerous data fields. The CFPB appears set to issue an upgraded open banking guideline in early 2026, with significant ramifications for banks and other conventional banks, fintechs, and information aggregators throughout the customer finance community.

The guideline was completed in March 2024 and consisted of tiered compliance dates based upon the size of the financial institution, with the largest required to start compliance in April 2026. The last rule was immediately challenged in Might 2024 by bank trade associations, which argued that the CFPB exceeded its statutory authority in issuing the rule, specifically targeting the prohibition on fees as unlawful.

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The court provided a stay as CFPB reassessed the rule. In our view, the Vought-led bureau may think about allowing a "sensible cost" or a similar requirement to allow information service providers (e.g., banks) to recover expenses related to offering the data while also narrowing the danger that fintechs and data aggregators are evaluated of the market.

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We anticipate the CFPB to considerably minimize its supervisory reach in 2026 by completing four bigger participant (LP) guidelines that develop CFPB supervisory jurisdiction over non-bank covered persons in numerous end markets. The changes will benefit smaller operators in the customer reporting, auto financing, customer debt collection, and worldwide money transfers markets.