Nearly two dozen states sue the Trump administration over funding for CFPB

A coalition of 21 states along with the District of Columbia sued the Trump administration on Monday to prevent it from defunding the Consumer Financial Protection Bureau, which says it will run out of money in a few weeks.

The consumer watchdog agency is funded by the Federal Reserve — unlike many other federal agencies — to insulate it from political whims. But under Acting Director Russell Vought, the CFPB is refusing to accept money from the Fed.

The CFPB argues that the law that established the agency says it must get funding from the Fed’s “combined earnings,” or profits made by the Fed. But the Fed doesn’t have those earnings, the Trump administration says, because it’s paying out more money than it’s taking in, or operating at a loss.

The attorneys general suing the administration — and some Democratic lawmakers — reject that argument. They say the CFPB is narrowly defining “combined earnings” as profits, whereas lawmakers had intended the term to mean the wider funds — or proceeds — coming into the Fed.

In their suit, filed in the U.S. District Court in Oregon, the states argue Vought and CFPB are using “an unreasonable and unlawful interpretation of ‘combined earnings.'” The agency’s stance puts the “CFPB at risk of losing all of its funding as early as January 2026,” the states argue.

Such a loss of funding would hurt their residents, the attorney generals argue.

In a statement, New York Attorney General Letitia James — who is leading the coalition of states — argues that the CFPB is legally required to “collect and process consumer complaints and share that complaint data with states,” which the agency can’t do if it isn’t funded.

“Defunding the Consumer Financial Protection Bureau will make it harder to stop predatory lenders, scammers, and other bad actors from taking advantage of New Yorkers,” James said in the statement.

“My office and attorneys general across the country rely on the CFPB for consumer complaints and other data to get justice for consumers,” she added.

Under the Trump administration, much of the CFPB has been gutted, with the agency preventing many of its staff from doing their work. The administration also has tried to fire most of the CFPB’s staff, though those attempts have been blocked by the courts.

Since its creation in the aftermath of the 2008 financial crisis, the CFPB has been the target of many conservatives. They argue the agency is too aggressive when it comes to enforcement and that it’s not accountable enough to Congress.