Trump administration calls CFPB Federal Reserve funding ‘unlawful’

view original post

Nov. 11 (UPI) — The Consumer Financial Protection Bureau cannot legally be funded by the Federal Reserve after spending its congressionally allocated funds, the Justice Department said in a federal court filing.

The CFPB anticipates expending all allocated funds early next year and cannot continue without receiving funding from Congress, Assistant Attorney General Brett Shumate and other officials said Monday in a notice to the U.S. Court of Appeals for the District of Columbia.

“The bureau does not know whether and the extent to which Congress will appropriate funding to pay the expenses of the bureau,” Shumate said.

When appropriations funding lapses, federal agencies cannot approve related spending or other obligations that exceed their currently available funds, he said.

“The Antideficiency Act restricts the conduct of business by agencies during a lapse in appropriations,” Shumate said.

“The act generally prohibits agency heads and their employees from making or authorizing expenditures or obligations in excess of or in advance of appropriations unless authorized by law,” he added.

The DOJ acknowledged that the U.S. District Court of the District of Columbia has enjoined the CFPB from firing its 1,700 employees and ceasing operations without Congress voting to abolish the bureau.

Without additional funding from Congress, the CFPB cannot continue to operate and exists in name only, Shumate, and other officials, argue.

“The bureau acknowledges that this court’s injunction, which restricts the agency’s conduct regarding employment, contracting and facilities, among other things, remains in effect,” he said.

“Defendants do not understand any provision of the court’s injunction to impose obligations on the agency that would violate the Antideficiency Act,” he added.

The CFPB has enough funding to continue at least through the end of the year, but Congress must approve funding for it to continue in 2026 after expending its congressionally allocated funds, Shumate and other officials said.

Without an additional allocation from Congress for the 2026 fiscal year, the CFPB will run out of money soon, Politico reported.

Politico writer Michael Stratford suggested continued CFPB funding is unlikely due to Republicans holding majorities in the House and Senate.

He cited a DOJ memorandum made on Friday, and included with Monday’s federal court notice, which says the CFPB only can draw funding from profits generated by the Federal Reserve through its combined earnings.

The Federal Reserve has more outlays than it does revenues and is unprofitable, according to the DOJ.

Because the Federal Reserve is unprofitable, the CFPB cannot obtain funding from it to continue its business activities, the DOJ concluded.