21 Democratic-led states sue White House over consumer protection bureau funding
Posted on: Dec 23, 2025 04:55 IST | Posted by: Hindustantimes
A fusion of 21 attorneys superior general from Democratic-led states sued the Consumer Financial shelter Bureau and its theatre director, charles taze russell Vought, on Monday, asserting that the White House's argument to withhold funds from the consumer protection agency is unconstitutional.
The lawsuit has to do with the Trump administration's argument that the CFPB can only be funded by the Federal Reserve's profits. The Federal Reserve has been running a loss since 2022, a side effect of the Fed raising interest rates sharply to combat inflation, because it holds bonds that pay low interest from the pandemic, but it needs to pay out higher amounts of interest to the banks that hold their deposits with the bank.
The White House has argued for several months that the CFPB cannot lawfully draw funds to fund its operations from the Fed if the Fed does not have “combined earnings” to allocate to the bureau. Without additional funds, the CFPB is expected to deplete its operating funds completely in January.
The phrase “combined earnings” is found in the text of the Dodd-Frank Act, the law that created the CFPB more than a decade ago. Legislators and policymakers from the time Dodd-Frank was crafted have argued that the phrase “combined earnings” was not meant to infer the Fed needed to make an actual profit to fund the CFPB. The White House's interpretation of the Dodd-Frank Act is being litigated in a separate lawsuit filed by the CFPB employees' union against Vought.
The Democratic AGs argue that the CFPB was lawfully created by Congress, and the White House cannot pick and choose which parts of the government it wishes to fund or not. Further, the CFPB is required to provide consumer complaint information to the individual states to stop bad actors, and if the CFPB is not operating, it cannot meet its statutory requirements.
“Defunding the Consumer Financial Protection Bureau will make it harder to stop predatory lenders, scammers, and other bad actors from taking advantage of New Yorkers,” said Attorney General Letitia James of New York.
A spokeswoman for Vought did not respond to an email for comment. (AP) AMJ AMJ
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