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Capstone believes the Trump administration is intent on dismantling the Customer Financial Protection Bureau (CFPB), even as the agencyconstrained by limited budgets and staffingmoves forward with a broad deregulatory rulemaking program favorable to market. As federal enforcement and supervision recede, we expect well-resourced, Democratic-led states to action in, producing a fragmented and unequal regulatory landscape.

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While the ultimate outcome of the litigation remains unknown, it is clear that consumer financing business throughout the community will gain from minimized federal enforcement and supervisory threats as the administration starves the agency of resources and appears committed to lowering the bureau to a company on paper only. Since Russell Vought was called acting director of the agency, the bureau has dealt with lawsuits challenging different administrative choices planned to shutter it.

Vought also cancelled numerous mission-critical contracts, provided stop-work orders, and closed CFPB offices, to name a few actions. The CFPB chapter of the National Treasury Employees Union (NTEU) right away challenged the actions. After evidentiary hearings, Judge Amy Berman Jackson of the United States District Court for the District of Columbia provided a preliminary injunction stopping briefly 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 attorneys acknowledged that getting rid of the bureau would require an act of Congress and that the CFPB remained accountable for performing its statutorily needed functions under the Dodd-Frank Wall Street Reform and Customer Protection Act. On August 15, 2025, the DC Circuit provided a 2-1 decision in favor of the CFPB, partially leaving Judge Berman Jackson's preliminary injunction that blocked the bureau from implementing mass RIFs, but staying the choice pending appeal.

En banc hearings are hardly ever approved, however we expect NTEU's request to be approved in this circumstances, provided the detailed district court record, Judge Cornelia Pillard's lengthy dissent on appeal, and more recent actions that indicate the Trump administration means to functionally close the CFPB. In addition to litigating the RIFs and other administrative actions targeted at closing the company, the Trump administration aims to develop off budget plan cuts incorporated into the reconciliation bill passed in July to even more starve the CFPB of resources.

Dodd-Frank insulates the CFPB from direct appropriations by Congress, rather licensing it to request funding directly from the Federal Reserve, with the quantity capped at a percentage of the Fed's business expenses, based on a yearly inflation modification. The bureau's ability to bypass Congress has frequently stirred criticism from congressional Republicans, and, in the spirit of that ire, the reconciliation bundle passed in July decreased the CFPB's funding from 12% of the Fed's operating expenditures to 6.5%.

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In CFPB v. Neighborhood Financial Providers Association of America, offenders argued the funding technique broke the Appropriations Clause of the Constitution. The Trump administration makes the technical legal argument that the CFPB can not legally demand financing from the Federal Reserve unless the Fed is profitable.

The CFPB stated it would run out of cash in early 2026 and could not lawfully request financing from the Fed, pointing out a memorandum opinion from the DOJ's Office of Legal Counsel (OLC). As an outcome, since the Fed has actually been running at a loss, it does not have actually "combined incomes" from which the CFPB may legally 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 approximately $280 million to continue performing its statutorily mandated functions. In our view, the new but repeating funding argument will likely be folded into the NTEU lawsuits.

Many consumer finance companies; home loan lending institutions and servicers; vehicle loan providers and servicers; fintechs; smaller sized customer reporting, financial obligation collection, remittance, and vehicle financing companiesN/A We expect the CFPB to press aggressively to implement an ambitious deregulatory agenda in 2026, in tension with the Trump administration's effort to starve the agency of resources.

In September 2025, the CFPB published its Spring 2025 Regulatory Program, with 24 rulemakings. The agenda follows the agency's rescission of almost 70 interpretive rules, policy statements, circulars, and advisory opinions going back to the company's inception. Likewise, the bureau released its 2025 supervision and enforcement concerns memorandum, which highlighted a shift in supervision back to depository organizations and home mortgage loan providers, an increased concentrate on areas such as fraud, support for veterans and service members, and a narrower enforcement posture.

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We view the proposed rule changes as broadly favorable to both consumer and small-business lending institutions, as they narrow possible liability and direct exposure to fair-lending analysis. Particularly relative to the Rohit Chopra-led CFPB throughout the Biden administration, we expect fair-lending guidance and enforcement to practically vanish in 2026. First, a proposed rule to narrow Equal Credit Opportunity Act (ECOA) regulations aims to remove disparate effect claims and to narrow the scope of the discouragement provision that restricts creditors from making oral or written statements intended to dissuade a customer from looking for credit.

The brand-new proposal, which reporting recommends will be completed on an interim basis no behind early 2026, considerably narrows the Biden-era guideline to omit specific small-dollar loans from protection, lowers the limit for what is considered a small company, and gets rid of lots of information fields. The CFPB appears set to release an updated open banking guideline in early 2026, with significant implications for banks and other traditional monetary organizations, fintechs, and information aggregators throughout the consumer finance environment.

The rule was completed in March 2024 and included tiered compliance dates based upon the size of the banks, with the biggest needed to start compliance in April 2026. The final guideline was immediately challenged in May 2024 by bank trade associations, which argued that the CFPB surpassed its statutory authority in providing the guideline, particularly targeting the prohibition on fees as illegal.

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The court issued a stay as CFPB reassessed the rule. In our view, the Vought-led bureau may consider permitting a "affordable fee" or a comparable requirement to make it possible for data suppliers (e.g., banks) to recoup expenses connected with providing the data while also narrowing the risk that fintechs and information aggregators are priced out of the market.

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We expect the CFPB to drastically lower its supervisory reach in 2026 by finalizing 4 bigger participant (LP) guidelines that develop CFPB supervisory jurisdiction over non-bank covered individuals in different end markets. The changes will benefit smaller sized operators in the consumer reporting, automobile finance, consumer debt collection, and global money transfers markets.