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Capstone believes the Trump administration is intent on dismantling the Customer Financial Protection Bureau (CFPB), even as the agencyconstrained by restricted spending plans and staffingmoves forward with a broad deregulatory rulemaking agenda beneficial to industry. As federal enforcement and supervision decline, we anticipate well-resourced, Democratic-led states to step in, producing a fragmented and uneven regulatory landscape.

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While the ultimate result of the litigation remains unknown, it is clear that customer financing business throughout the environment will take advantage of reduced federal enforcement and supervisory dangers 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 firm, the bureau has actually dealt with litigation challenging various administrative choices meant to shutter it.

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

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DOJ and CFPB legal representatives acknowledged that removing the bureau would need an act of Congress and that the CFPB stayed accountable for performing its statutorily required functions under the Dodd-Frank Wall Street Reform and Customer Security Act. On August 15, 2025, the DC Circuit released a 2-1 decision in favor of the CFPB, partially abandoning Judge Berman Jackson's initial injunction that blocked the bureau from implementing mass RIFs, but staying the choice pending appeal.

En banc hearings are seldom granted, but we expect NTEU's demand to be authorized in this instance, given the detailed district court record, Judge Cornelia Pillard's prolonged dissent on appeal, and more recent actions that signify the Trump administration intends to functionally close the CFPB. In addition to prosecuting the RIFs and other administrative actions focused on closing the company, the Trump administration intends to build off budget cuts included into the reconciliation costs passed in July to further starve the CFPB of resources.

Dodd-Frank insulates the CFPB from direct appropriations by Congress, instead authorizing it to demand financing straight from the Federal Reserve, with the amount capped at a percentage of the Fed's operating costs, subject to an annual inflation adjustment. The bureau's capability to bypass Congress has frequently 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 Solutions Association of America, accuseds argued the financing technique broke the Appropriations Clause of the Constitution. The Trump administration makes the technical legal argument that the CFPB can not lawfully demand funding from the Federal Reserve unless the Fed is rewarding.

The technical legal argument was filed in November in the NTEU litigation. The CFPB said it would run out of cash in early 2026 and might not legally request funding from the Fed, citing a memorandum viewpoint from the DOJ's Office of Legal Counsel (OLC). Using the arguments made by offenders in other CFPB litigation, the OLC's memorandum viewpoint analyzes the Dodd-Frank law, which allows the CFPB to draw financing from the "combined incomes" of the Federal Reserve, to argue that "profits" indicate "earnings" as opposed to "revenue." As a result, since the Fed has been performing at a loss, it does not have actually "combined incomes" from which the CFPB might lawfully draw funds.

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Appropriately, in early December, the CFPB acted 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.

A lot of customer finance companies; mortgage lending institutions and servicers; automobile lending institutions and servicers; fintechs; smaller customer reporting, debt collection, remittance, and automobile financing companiesN/A We anticipate the CFPB to push aggressively to implement an ambitious 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 agenda follows the agency's rescission of nearly 70 interpretive guidelines, policy declarations, circulars, and advisory viewpoints going back to the agency's creation. Similarly, the bureau released its 2025 guidance and enforcement top priorities memorandum, which highlighted a shift in guidance back to depository organizations and home mortgage lenders, an increased concentrate on areas such as scams, assistance for veterans and service members, and a narrower enforcement posture.

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We view the proposed rule changes as broadly beneficial to both consumer and small-business lenders, as they narrow prospective liability and direct exposure to fair-lending examination. Particularly relative to the Rohit Chopra-led CFPB during the Biden administration, we expect fair-lending supervision and enforcement to essentially disappear in 2026. A proposed rule to narrow Equal Credit Chance Act (ECOA) policies aims to remove disparate impact claims and to narrow the scope of the frustration provision that forbids lenders from making oral or written declarations meant to discourage a consumer from applying for credit.

The brand-new proposition, which reporting suggests will be finalized on an interim basis no later on than early 2026, drastically narrows the Biden-era guideline to omit specific small-dollar loans from coverage, decreases the threshold for what is thought about a small company, and gets rid of numerous information fields. The CFPB appears set to issue an updated open banking rule in early 2026, with significant ramifications for banks and other traditional banks, fintechs, and data aggregators across the consumer financing community.

The rule was finalized in March 2024 and included tiered compliance dates based on the size of the financial institution, with the largest required to start compliance in April 2026. The final guideline was immediately challenged in Might 2024 by bank trade associations, which argued that the CFPB surpassed its statutory authority in providing the guideline, specifically targeting the restriction on charges as unlawful.

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The court issued a stay as CFPB reevaluated the guideline. In our view, the Vought-led bureau may think about permitting a "sensible fee" or a comparable standard to enable information providers (e.g., banks) to recoup expenses connected with supplying the information while also narrowing the danger that fintechs and information aggregators are evaluated of the marketplace.

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We anticipate the CFPB to significantly minimize its supervisory reach in 2026 by completing 4 larger participant (LP) rules that develop CFPB supervisory jurisdiction over non-bank covered persons in different end markets. The modifications will benefit smaller sized operators in the consumer reporting, automobile financing, consumer debt collection, and worldwide cash transfers markets.