Federal Court Orders Trump Administration to Continue Funding the CFPB Amid Defunding Battle
Judge Amy Berman Jackson rejects White House argument and demands continued financial support for the Consumer Financial Protection Bureau ahead of 2026 funding crisis
A federal judge has ruled that the Trump administration must continue to seek and secure funding for the Consumer Financial Protection Bureau, temporarily blocking efforts by the White House to effectively defund the agency.
The decision, issued on December 30 by U.S. District Judge Amy Berman Jackson in Washington, came just days before the bureau was projected to exhaust the funds necessary to pay its employees and continue operating.
The administration had advanced a novel legal interpretation arguing that, because the Federal Reserve is operating at a loss, it lacks “combined earnings” from which to transfer funds to the CFPB.
The bureau receives its funding through transfers from the Federal Reserve rather than through the standard congressional appropriations process.
Judge Jackson rejected this reasoning, saying that such a stance would amount to closing an agency Congress created, and that an earlier injunction already requires the administration to keep the bureau financially supported.
The ruling upholds a previous injunction designed to preserve the bureau’s existence and halt attempts to dismantle it through layoffs and budget cuts.
A coalition of 21 states and the District of Columbia has separately sued the administration over its interpretation of the CFPB’s funding statute, arguing that it misreads congressional intent and risks shutting down the agency that plays a central role in protecting consumers from financial misconduct.
Those legal proceedings are expected to continue into early 2026.
The CFPB has been largely in limbo throughout 2025, with many of its operations stalled amid funding uncertainties and leadership changes.
The judge’s decision ensures that at least for now the bureau will continue to receive transfers from the Federal Reserve and that its statutory duties will remain intact while litigation proceeds.
Officials involved in the case indicate the U.S. Court of Appeals for the District of Columbia Circuit will review broader aspects of the dispute early next year, meaning the long-term fate of the CFPB’s funding structure remains unresolved.
The decision, issued on December 30 by U.S. District Judge Amy Berman Jackson in Washington, came just days before the bureau was projected to exhaust the funds necessary to pay its employees and continue operating.
The administration had advanced a novel legal interpretation arguing that, because the Federal Reserve is operating at a loss, it lacks “combined earnings” from which to transfer funds to the CFPB.
The bureau receives its funding through transfers from the Federal Reserve rather than through the standard congressional appropriations process.
Judge Jackson rejected this reasoning, saying that such a stance would amount to closing an agency Congress created, and that an earlier injunction already requires the administration to keep the bureau financially supported.
The ruling upholds a previous injunction designed to preserve the bureau’s existence and halt attempts to dismantle it through layoffs and budget cuts.
A coalition of 21 states and the District of Columbia has separately sued the administration over its interpretation of the CFPB’s funding statute, arguing that it misreads congressional intent and risks shutting down the agency that plays a central role in protecting consumers from financial misconduct.
Those legal proceedings are expected to continue into early 2026.
The CFPB has been largely in limbo throughout 2025, with many of its operations stalled amid funding uncertainties and leadership changes.
The judge’s decision ensures that at least for now the bureau will continue to receive transfers from the Federal Reserve and that its statutory duties will remain intact while litigation proceeds.
Officials involved in the case indicate the U.S. Court of Appeals for the District of Columbia Circuit will review broader aspects of the dispute early next year, meaning the long-term fate of the CFPB’s funding structure remains unresolved.
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