WASHINGTON— A federal judge in California has ordered the Consumer Financial Protection Bureau to continue seeking operating funds from the Federal Reserve, ruling that acting CFPB Director Russell Vought violated federal law when he refused to request additional money and attempted to let the agency’s reserves run down, Reuters reported.
U.S. District Judge Edward Davila said Vought “acted arbitrarily, capriciously and contrary to law,” rejecting the administration’s argument that the CFPB could no longer draw funds because the Fed was not generating sufficient “combined earnings.”
In a sharply worded decision, Davila said the CFPB’s funding statute under Dodd-Frank requires the Bureau to request the amount “reasonably necessary” to carry out its duties, and that Vought could not unilaterally reinterpret the law to effectively starve the agency. Reuters reported the judge ordered the Bureau to continue requesting funding indefinitely.
The ruling is the latest setback for the Trump administration’s effort to shrink the CFPB. Bloomberg Law and Courthouse News reported that Vought had already sought an initial $145 million funding tranche after a separate federal court order in another case, but continued to argue the Bureau could not lawfully rely on Fed transfers if the central bank was operating at a loss. Davila rejected that position, saying the Bureau must function as Congress intended rather than by executive fiat.
The case adds to mounting legal pressure over the administration’s attempts to curb the CFPB’s operations, which have also drawn challenges from employee unions, consumer groups and Democratic state attorneys general. Reuters noted the CFPB’s funding structure itself was upheld by the U.S. Supreme Court in 2024, making Davila’s ruling another significant rebuke to efforts to use budget mechanics to weaken the agency without congressional action.
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URL: https://www.cutoday.info/Fresh-Today/California-Judge-Says-Vought-Broke-Law-In-Move-To-Starve-CFPB-Of-Funds