Trump administration must fund US consumer finance watchdog, judge says

By Douglas Gillison

WASHINGTON, Dec 30 (Reuters) – A federal judge on Tuesday rejected a claim by President Donald Trump’s administration that it is legally barred from securing funding for the U.S. Consumer Financial Protection Bureau, noting that a court order already bars the administration from shutting the agency down.

The ruling from U.S. District Judge Amy Berman Jackson came as the CFPB faced the imminent exhaustion of funds. The Trump administration has denied the CFPB additional funding since taking control of the agency in February.

Officials say cash on hand could be exhausted in early 2026. CFPB representatives did not immediately respond to a request for comment.

The agency’s supporters say that without it the public will be more exposed to predatory lending practices, scams and other abuse. Trump and others have accused it of politicized enforcement and called it a burden on free enterprise.

The agency was started to protect financial services consumers after the financial crisis of 2008. It announced last month that an administration legal opinion held that, under the CFPB’s governing statute, it could not seek additional funding from the Federal Reserve so long as the central bank is losing money.

In her ruling on Tuesday, Judge Berman Jackson rejected this as outcome-driven reasoning without basis in the law and said it would violate her March injunction against shutting down the agency so long as a lawsuit plays out in court.

“It appears that defendants’ new understanding of ‘combined earnings’ is an unsupported and transparent attempt to achieve the very end the court’s injunction was put in place to prevent,” she wrote, adding that the administration’s “unilateral decision” to decline further CFPB funding was therefore a violation.

Unlike many federal agencies, the CFPB is funded by the Federal Reserve, rather than through a budget set annually by Congress. But lawmakers this year slashed the CFPB’s maximum allowable funding, meaning the agency may face tighter funding constraints regardless.

(Reporting by Douglas Gillison in Washington; Editing by David Gregorio)