In a December 30 ruling, Judge Amy Berman Jackson of the U.S. District Court for the District of Columbia granted a pending motion to clarify her injunction in National Treasury Employees Union v. CFPB, effectively requiring CFPB leadership to request funding from the Federal Reserve.
The earlier injunction bars the CFPB from initiating mass layoffs while the court considers a lawsuit challenging the legality of such efforts. That injunction is currently on appeal.
The motion arose from a November 10 filing with the court in which the CFPB submitted a “Notice of Potential Lapse in Appropriations to Pay the Expenses of the CFPB,” citing a novel legal opinion from the Department of Justice’s Office of Legal Counsel (OLC). That opinion concluded the CFPB could not draw funding from the Federal Reserve’s “combined earnings” as required by the Dodd-Frank Act.
The OLC reasoned that “combined earnings” are effectively equivalent to profit, and the Federal Reserve has not operated at a profit since approximately 2022, following measures taken to support the economy during the global pandemic.
Judge Jackson’s ruling is timely. In November, the CFPB publicly stated it anticipates exhausting its remaining funds as early as December 31.
The order does not prescribe an amount that the CFPB must seek to maintain operations. The “One Big Beautiful Bill Act” signed into law in July effectively slashes the amount the CFPB may seek from the Federal Reserve by approximately 50 percent.
NIADA is assessing how this and other developments may affect the CFPB’s otherwise ambitious rulemaking agenda for 2026, which includes several regulatory initiatives of importance to independent dealers. NIADA continues to actively engage on these issues through comment letters and other advocacy efforts.
