Federal judge rejects effort to defund Consumer Financial Protection Bureau

A federal judge has ruled that the Trump administration's attempt to defund the Consumer Financial Protection Bureau (CFPB) was unlawful. U.S. District Judge Ann Aiken determined that former acting CFPB Director Russell Vought violated federal law and the constitutional separation of powers by refusing to request necessary funding from the Federal Reserve.

The dispute arose after Vought concluded that the agency could not receive funding because the Federal Reserve’s interest expenses exceeded its income. This decision effectively halted funding for the 2026 fiscal year. A coalition of 22 states and the District of Columbia, including New Jersey, filed a lawsuit in December 2025 to challenge this action, arguing it violated the Dodd-Frank Wall Street Reform and Consumer Protection Act.

The CFPB is responsible for regulating financial institutions, enforcing consumer protection laws, and supervising large banks to prevent misleading terms and hidden fees. The court's order requires the agency to seek the funding necessary to continue its operations.