CFPB Notifies Court of Potential Funding Lapse

In court filings, DOJ notified the D.C. District Court and D.C. Circuit Court that the CFPB faces a potential lapse in appropriations because DOJ determined it may not legally request funds at this time from the Federal Reserve.  The CFPB anticipates having sufficient funds through at least calendar year 2025.

DOJ asserts that Dodd-Frank only permits the CFPB to request funds from the Federal Reserve when the Federal Reserve System is profitable.  According to DOJ’s Office of Legal Counsel, the Dodd-Frank Act’s language authorizing the CFPB to draw its funding from the “combined earnings of the Federal Reserve System” means the CFPB may only draw funding when the Federal Reserve System is profitable.  Profits are determined by subtracting the Federal Reserve’s interest expenses from its revenues.  DOJ argued that the CFPB cannot legally draw funds for its operations because the Federal Reserve System has not been profitable.

The CFPB remains subject to an injunction restricting the agency from taking certain actions regarding employment, contracting, and facilities.  While a three-judge panel of the D.C. Circuit Court lifted the D.C. District Court’s preliminary injunction preventing the CFPB from proceeding with reductions in force, plaintiff National Treasury Employees Union (NTEU) requested an en banc rehearing and the injunction remains in place pending that request.  However, DOJ argued in its filing that it does not believe the injunction requires the CFPB to violate the Anti-Deficiency Act and spend money that Congress has not appropriated.  As a result, if the CFPB runs out of funding and Congress does not appropriate any funding, DOJ indicated that the CFPB will not be able to comply with the injunction.  

Previous WBK coverage of the underlying case can be found here.