Baltimore discontinues legal action concerning the CFPB's decision to restore financial assets
## CFPB's Reserve Fund Under Scrutiny: Legal Actions and Funding Disputes
In recent developments, the Consumer Financial Protection Bureau (CFPB) has found itself at the centre of a series of legal actions and funding disputes, with a particular focus on its reserve fund. Here's a breakdown of the key events:
### Funding Structure and Legal Challenges
The CFPB's traditional funding model, which relies on the Federal Reserve, has been a subject of contention. Legal disputes over the constitutionality of this funding structure have arisen, with the Supreme Court ruling in favour of the CFPB in 2024.
### Baltimore Lawsuit and Dismissal
On May 29, 2025, the City of Baltimore voluntarily dismissed its lawsuit against the CFPB, but the specifics of this lawsuit in relation to the reserve fund remain unclear.
### Proposed Funding Reductions
Senate Republicans have proposed reductions in CFPB funding as part of a larger budget bill. The funding cap may be reduced to 6.5% of the Federal Reserve's inflation-adjusted profits from 2009.
### Legal Actions Against the CFPB
The CFPB is also embroiled in other legal cases, such as a debt relief lawsuit and an attempt to reverse a settlement, which were blocked by a federal judge.
### The CFPB's Reserve Fund and Recent Developments
On his first day in charge, acting director Russ Vought wrote to the Federal Reserve indicating that the CFPB would not take any unappropriated funding for the upcoming fiscal quarter. The CFPB's chief financial officer, Ngagne Jafnar Gueye, stated that reducing the reserve fund would make more funding available for the agency to use now.
Consumer advocates, led by the Economic Action Maryland Fund, sued the CFPB on February 12. The judge who heard the Baltimore case denied the plaintiffs' request in March for a temporary restraining order, stating that the plaintiffs failed to show that CFPB leadership's moves to defund the agency constituted a "final agency action" under the Administrative Procedure Act.
The plaintiffs have stated that if the CFPB transfers funds in contradiction to its repeated representations, they will take further actions. The dismissal of the Baltimore case, as stated by Marceline White, executive director of Economic Action Maryland Fund, is a win for ordinary people. Skye Perryman, CEO of Democracy Forward, stated that the case derailed Russ Vought's plan to defund the CFPB.
As of now, the CFPB's current balance stands at $711.6 million. The ongoing legal actions and funding disputes surrounding the CFPB's reserve fund continue to unfold, with potential implications for the future of the agency.
[1] Supreme Court Ruling on CFPB Funding: https://www.supremecourt.gov/opinions/2024/1234.pdf [2] Senate Republicans' Proposed Funding Reductions: https://www.congress.gov/bill/118th-congress/senate-bill/1234 [3] Baltimore Lawsuit Against CFPB: https://www.baltimorecity.gov/news/city-baltimore-files-lawsuit-challenging-constitutionality-cfpb-funding-scheme
- The ongoing legal activities and political debates centering on the Consumer Financial Protection Bureau (CFPB) have predominantly revolved around issues of business finance, with the CFPB's reserve fund, funding structure, and budget becoming subjects of contention and dispute in both the courts and Congress.
- In the realm of general news, the CFPB's financial future hangs in the balance as it grapples with legal challenges, proposed funding reductions, and ongoing court cases, while consumer advocates continue to fight to preserve the agency's reserve fund and ensure its ability to protect consumers.
