Federal Judge Orders Administration to Keep Funding the CFPB

Federal Judge Amy Berman Jackson has ordered the administration to continue funding the CFPB, blocking a legal maneuver that attempted to cut off the agency's budget due to the Federal Reserve operating losses.

If you were hoping the Consumer Financial Protection Bureau (CFPB) was about to quietly run out of cash and fade into the sunset, we have bad news.

In a pivotal ruling handed down today, U.S. District Judge Amy Berman Jackson ordered the Trump administration to continue funding the CFPB, effectively blocking a strategic attempt to starve the agency of its operating budget.

The "Starvation" Strategy Explained

To understand today's ruling, you have to look at the unique way the CFPB gets paid. Unlike most agencies that beg Congress for money every year, the CFPB draws its funding directly from the Federal Reserve.

This structure was designed to make the agency independent. But recently, Acting Director Russell Vought (appointed by the Trump administration with the explicit goal of reigning in the regulator) found a loophole.

• The Argument: The law says the CFPB is funded from the Fed's "combined earnings."

• The Loophole: Since 2022, the Federal Reserve has technically been operating at a loss (due to interest rate environments).

• The Move: Vought’s team argued that because the Fed has no "earnings" (profits), there is legally no money to transfer to the CFPB.

It was a clever, technical kill-switch designed to zero out the agency’s bank account by January 2026.

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The Ruling: "Starving" the CFPB is Illegal

Judge Jackson didn't buy it. In her 32-page decision released today, she slammed the administration's argument as a "manufactured" crisis designed to achieve what they couldn't do through Congress: eliminate the agency entirely.

She ruled that the Fed's temporary operating loss does not negate the statutory obligation to fund the consumer watchdog. The order mandates that funding must continue "seamlessly," ensuring the agency can pay its 1,400 employees and, crucially for our audience, continue its examinations and enforcement actions.

Look Ahead

While appeals are certain (the D.C. Circuit will hear arguments on February 24, 2026), the agency has the cash to keep operating right now.