US consumer watchdog says it is legally blocked from accessing funds

By Douglas Gillison

WASHINGTON (Reuters) -The top U.S. consumer watchdog said on Monday it was legally prohibited from drawing cash from the Federal Reserve to support continuing operations, but that its current funding should last through the end of this year “at least”.

The U.S. Consumer Financial Protection Bureau has declined funding since President Donald Trump took control in February, with Trump and acting Director Russell Vought having called for its elimination.

The CFPB’s workforce faces mounting uncertainty over its ability to continue to pay them or offer severance while a legal battle plays out over the Trump administration’s plans to fire the vast majority of staff.

The agency said in a statement that an administration legal opinion held that because the Federal Reserve System was not currently reporting “combined earnings” under the 2010 statute which created the CFPB, the agency could not lawfully draw funding from the central bank. 

The CFPB receives its funding directly from the Fed, unlike federal agencies for which Congress appropriates money annually.

“The Bureau anticipates having sufficient funds to continue operations until at least December 31, 2025,” it said.

A Federal Reserve spokesperson declined to comment.

Federal courts and the Texas Attorney General have rejected the premise that the CFPB can only draw funds from a Fed surplus, finding that law does not require this.

The Supreme Court last year upheld the constitutionality of the CFPB’s funding structure.

(Reporting by Douglas Gillison in Washington; Editing by Lincoln Feast and Alexander Smith)