Federal Judge Sides with CFPB in Funding Dispute with Fed

A federal judge has ruled in favor of the Consumer Financial Protection Bureau (CFPB) in its fight for funding from the Federal Reserve. In a decision made on September 25, U.S. District Judge Ann Aiken rejected the Trump administration's claim that the CFPB cannot take money from the Fed while it is losing funds.

The CFPB does not receive an annual appropriation from Congress like most federal agencies. Instead, it relies on the Federal Reserve to transfer funds quarterly based on the director's request. The 2010 Dodd-Frank law requires the Fed to send the amount the director deems 'reasonably necessary' for the bureau's operations.

The fight in this case centered around the interpretation of two words: 'combined earnings.' Acting CFPB Director Russell Vought argued that this phrase meant leftover profit, and since the Fed has been losing money, there was nothing to send. However, Judge Aiken ruled that 'combined earnings' refers to the gross revenue of the Fed, not just its profits.

The ruling comes after a lawsuit filed by Democratic-led states in December 2025, which argued that Vought's funding cutoff would harm their efforts to police lenders and scammers. The judge vacated Vought's determination and ordered the Fed to transfer funds based on the director's request.