Senior Democratic lawmakers, led by Rep. Maxine Waters (D-CA) and Sen. Elizabeth Warren (D-MA), have filed an amicus brief to challenge actions by Consumer Financial Protection Bureau (CFPB) Acting Director Russell Vought arguing the unlawful block of consistent funding for the agency.
The brief, filed in federal court, was joined by 22 Democrats from the House Financial Services Committee and 11 Democrats from the Senate Banking Committee, along with key authors of the Dodd-Frank Wall Street Reform and Consumer Protection Act, including former Senate Banking Committee Chairman Chris Dodd (D-CT) and former House Financial Services Committee Chairman Barney Frank (D-MA).
The legal action centers on Vought’s reinterpretation of the CFPB’s statutory funding mechanism. Under the Dodd-Frank Act, the CFPB is financed through “combined earnings” of the Federal Reserve, a provision designed to provide the Bureau with a stable and independent funding stream. According to the brief, Vought has adopted a restrictive definition that treats Federal Reserve earnings as limited to instances where total revenue exceeds interest expenses. The lawmakers contend this new definition is at odds with the longstanding understanding of the statute and would likely deprive the CFPB of necessary funds precisely when the economy is under stress.
“In sum, Acting Director Vought’s newfound definition of ‘combined earnings’ is completely at odds with Congress’s plan in passing Dodd-Frank and setting up the Bureau,” the brief states. It further asserts that the reinterpretation undermines the CFPB’s independence, weakens its financial protections, and creates results that Congress explicitly sought to avoid in crafting the funding model.
Since its establishment under Dodd-Frank, the CFPB has played a central role in consumer financial protection, returning more than $21 billion to consumers harmed by unfair practices by banks and financial firms. Rep. Waters and Committee Democrats assert that the funding challenge is part of a broader effort by the Trump administration to roll back the Bureau’s authority.
