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Capstone thinks the Trump administration is intent on taking apart the Customer Financial Protection Bureau (CFPB), even as the agencyconstrained by minimal spending plans and staffingmoves forward with a broad deregulatory rulemaking program favorable to market. As federal enforcement and supervision decline, we anticipate well-resourced, Democratic-led states to action in, producing a fragmented and irregular regulatory landscape.

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While the supreme outcome of the lawsuits stays unidentified, it is clear that customer financing business throughout the ecosystem will gain from decreased federal enforcement and supervisory risks as the administration starves the company of resources and appears devoted to decreasing the bureau to a company on paper only. Because Russell Vought was named acting director of the firm, the bureau has actually faced litigation challenging numerous administrative choices planned to shutter it.

Vought also cancelled various mission-critical agreements, provided stop-work orders, and closed CFPB workplaces, amongst other actions. The CFPB chapter of the National Treasury Employees Union (NTEU) immediately challenged the actions. After evidentiary hearings, Judge Amy Berman Jackson of the US District Court for the District of Columbia issued an initial injunction stopping briefly the reductions in force (RIFs) and other actions, holding that the CFPB was attempting to render itself functionally unusable.

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DOJ and CFPB lawyers acknowledged that eliminating the bureau would require an act of Congress and that the CFPB remained accountable for performing its statutorily required functions under the Dodd-Frank Wall Street Reform and Customer Protection Act. On August 15, 2025, the DC Circuit issued a 2-1 decision in favor of the CFPB, partly vacating Judge Berman Jackson's preliminary injunction that blocked the bureau from implementing mass RIFs, but remaining the choice pending appeal.

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

Dodd-Frank insulates the CFPB from direct appropriations by Congress, rather licensing it to request funding straight from the Federal Reserve, with the amount capped at a percentage of the Fed's business expenses, subject to an annual inflation adjustment. The bureau's ability to bypass Congress has actually routinely stirred criticism from congressional Republicans, and, in the spirit of that ire, the reconciliation package passed in July lowered the CFPB's financing from 12% of the Fed's operating costs to 6.5%.

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In CFPB v. Community Financial Services Association of America, offenders argued the funding technique violated the Appropriations Stipulation of the Constitution. The Trump administration makes the technical legal argument that the CFPB can not legally demand funding from the Federal Reserve unless the Fed is profitable.

The technical legal argument was filed in November in the NTEU lawsuits. The CFPB said it would lack money in early 2026 and might not lawfully demand funding from the Fed, mentioning a memorandum viewpoint from the DOJ's Workplace of Legal Counsel (OLC). Utilizing the arguments made by offenders in other CFPB litigation, the OLC's memorandum viewpoint interprets the Dodd-Frank law, which allows the CFPB to draw financing from the "combined revenues" of the Federal Reserve, to argue that "revenues" mean "revenue" as opposed to "income." As an outcome, because the Fed has been performing at a loss, it does not have actually "combined incomes" from which the CFPB may lawfully draw funds.

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Accordingly, in early December, the CFPB followed up 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 but repeating financing argument will likely be folded into the NTEU litigation.

Most customer finance business; home loan loan providers and servicers; auto lenders and servicers; fintechs; smaller sized consumer reporting, financial obligation collection, remittance, and car finance companiesN/A We expect the CFPB to push strongly to execute an enthusiastic deregulatory program in 2026, in stress with the Trump administration's effort to starve the firm of resources.

In September 2025, the CFPB published its Spring 2025 Regulatory Program, with 24 rulemakings. The agenda follows the company's rescission of almost 70 interpretive rules, policy declarations, circulars, and advisory viewpoints dating back to the company's creation. Likewise, the bureau released its 2025 guidance and enforcement priorities memorandum, which highlighted a shift in guidance back to depository institutions and home mortgage lenders, an increased concentrate on locations such as scams, support for veterans and service members, and a narrower enforcement posture.

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We see the proposed rule modifications as broadly favorable to both customer and small-business lenders, as they narrow possible liability and exposure to fair-lending scrutiny. Especially relative to the Rohit Chopra-led CFPB during the Biden administration, we anticipate fair-lending guidance and enforcement to practically vanish in 2026. A proposed rule to narrow Equal Credit Chance Act (ECOA) regulations aims to remove disparate impact claims and to narrow the scope of the frustration provision that forbids lenders from making oral or written declarations intended to dissuade a customer from using for credit.

The new proposition, which reporting suggests will be completed on an interim basis no behind early 2026, significantly narrows the Biden-era guideline to exclude specific small-dollar loans from protection, lowers the threshold for what is considered a little service, and eliminates many data fields. The CFPB appears set to issue an upgraded open banking rule in early 2026, with substantial ramifications for banks and other traditional monetary institutions, fintechs, and data aggregators throughout the consumer finance environment.

The rule was completed in March 2024 and consisted of tiered compliance dates based upon the size of the banks, with the largest needed to start compliance in April 2026. The final guideline was right away challenged in May 2024 by bank trade associations, which argued that the CFPB exceeded its statutory authority in issuing the guideline, particularly targeting the prohibition on charges as unlawful.

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The court issued a stay as CFPB reevaluated the rule. In our view, the Vought-led bureau might consider permitting a "reasonable cost" or a comparable requirement to enable information providers (e.g., banks) to recoup costs related to providing the data while likewise narrowing the risk that fintechs and data aggregators are evaluated of the marketplace.

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We expect the CFPB to drastically lower its supervisory reach in 2026 by settling four bigger individual (LP) rules that develop CFPB supervisory jurisdiction over non-bank covered persons in various end markets. The changes will benefit smaller sized operators in the customer reporting, automobile finance, customer debt collection, and global cash transfers markets.