Acting CFPB Director Vought Cuts Off Federal Reserve Money Pipeline

The Trump administration has taken decisive action to restore constitutional order to one of Washington’s most brazenly unaccountable agencies, with Acting Consumer Financial Protection Bureau Director Russ Vought moving to end the Bureau’s unlawful funding arrangement through the Federal Reserve.

Here are the facts. Last week, the CFPB filed a notice in the case NTEU v. Vought revealing that the Justice Department’s Office of Legal Counsel determined the Bureau may not legally request funds from the Federal Reserve under the Dodd-Frank Act. The legal reasoning is straightforward: the Federal Reserve lacks the “combined earnings” from the CFPB as stipulated by Dodd-Frank. Since OLC opinions are binding on executive agencies, this effectively cuts off the CFPB’s funding pipeline, though existing funds will sustain operations through year’s end.

This matters because the CFPB represents everything wrong with the administrative state. The agency was deliberately designed by Senator Elizabeth Warren to operate outside congressional oversight, which means outside the accountability mechanisms the Founders established. Instead of relying on congressional appropriations like every other federal agency, the CFPB has been siphoning money directly from the Federal Reserve, answering to no one.

House Freedom Caucus Chairman Andy Harris and Representative Marlin Stutzman, who serves on the House Financial Services Committee, rightfully applauded this development. Stutzman articulated the core problem succinctly: “Since its creation, the CFPB has morphed into an unaccountable bureaucracy with little transparency, sweeping authority, and a history of prioritizing politics over sound policy.”

He is absolutely correct. Democrats have weaponized the CFPB to disrupt functioning markets and restrict consumer financial freedom under the guise of protection. The agency has engaged in what can only be described as regulation by enforcement, targeting American businesses without proper legal authority and imposing progressive policy preferences through bureaucratic fiat rather than democratic legislation.

The Trump administration deserves credit for systematically dismantling this unconstitutional apparatus. While the Big Beautiful Bill could not completely eliminate the CFPB, it successfully slashed the agency’s annual budget cap from 12 percent to 6.5 percent of the Federal Reserve’s operating expenses. This represents real progress toward reining in an agency that never should have existed in its current form.

Mark Paoletta, chief legal officer for the CFPB under the Trump administration, made the stakes clear: “The most important thing that we should be doing right now for liberty, the rule of law, consumers, and the business of America is to shut down these cases.” He understands that the CFPB’s enforcement actions represent government overreach that harms both economic freedom and the businesses that drive American prosperity.

The constitutional principle at stake is fundamental. Congress holds the power of the purse. When agencies operate outside congressional appropriations, they operate outside constitutional constraints. Warren designed the CFPB this way intentionally, creating a fourth branch of government accountable to no one, pursuing a progressive agenda without democratic input or oversight.

The Trump administration’s OMB and CFPB teams have worked methodically to unwind the agency’s ability to wage war on American businesses. This latest development represents a significant victory for constitutional governance and economic freedom. If the CFPB cannot access Federal Reserve funding, it will finally face the accountability mechanisms that should have applied from day one.

The question now is whether this administrative action can withstand inevitable legal challenges from progressives who prefer unaccountable bureaucracy to constitutional order. The answer should be obvious to anyone who has read the Constitution.