District Court Clarifies CFPB Injunction in NTEU v. Vought
On December 30, the United States District Court for the District of Columbia (District Court) granted the National Treasury Employees Union’s (NTEU’s or Plaintiff’s) motion to clarify the existing injunction against Russel Vought and the Consumer Financial Protection Bureau (CFPB or Defendants). At issue is the Department of Justice’s Office of Legal Counsel (OLC) opinion memo (the OLC Memo) dated November 7 in which the OLC stated that the CFPB could not legally request funds from the Federal Reserve’s “combined earnings,” as required by Dodd-Frank, because the Federal Reserve had been operating at a loss since 2022. As a result, the Defendants notified the District Court that they would only have sufficient funds to carry out normal operations until December 31. This motion triggered the Plaintiffs to submit their motion to clarify the existing injunction, and the Plaintiffs sought (and ultimately received) the District Court’s judgment that the OLC Memo did not permit the Defendants from breaching the terms of the injunction.
Background
NTEU v. Vought began in the early days of the second Trump Administration, as Acting Director Russel Vought sought to initiate a large-scale reduction-in-force (RIF) at the CFPB. This was met with an immediate challenge from the NTEU, which is the largest union representing CFPB employees. On March 28, the District Court issued a preliminary injunction prohibiting the Defendants from executing the RIF and “to ensure that the CFPB would continue to exist as Congress mandated and perform its statutorily required duties while the merits of plaintiffs’ claims were litigated.”[1] The Defendants appealed the decision and the Court of Appeals initially vacated the preliminary injunction on August 15. However, Plaintiffs sought (and were granted) a rehearing en banc (meaning in front of the entire Circuit Court panel) which vacated the Court of Appeals’ order to vacate the injunction.
On Friday, November 7, the OLC produced the OLC Memo at Acting Director Russell Vought’s request. The central question of the OLC Memo was if it was legally permissible for the CFPB to request funds from the Federal Reserve’s “combined earnings,” as required by Dodd-Frank, if the Federal Reserve is operating at a loss. Since 2022, the Federal Reserve has operated at a loss due to rising interest rates. The OLC Memo argued that “combined earnings” included the actual earnings of the Federal Reserve System less any interest payments. As a result, the OLC Memo stated that the CFPB could not draw funds from the Federal Reserve because, using this definition of “combined earnings,” there were none from which to draw.
On Monday, November 10, the Defendants submitted a notice to the District Court that, pursuant to the OLC Memo, the CFPB would run out of funds sometime in early 2026. At that time, the CFPB would not be able to perform statutorily required mandates and, in turn, would not be able to comply with the injunction. The Plaintiffs quickly submitted a motion to clarify the injunction, seeking the District Court’s opinion that the OLC Memo was not sufficient cause to breach the injunction.
Ruling and the Future of the Case
District Court Judge Amy Berman Jackson issued a 32-page opinion in which she granted the Plaintiff’s motion to clarify the injunction. Judge Jackson stated that the OLC Memo did not apply the correct definition of “combined earnings” and that, in her view, the CFPB can continue to be funded despite the Federal Reserve operating at a loss. In doing so, the judge noted that:
“Until Acting Director Vought issued his Notice, both the Bureau and the Federal Reserve Chair had been adamant that the provision should be read as the plaintiffs read it today, insisting that the Fed must fund the Bureau even when its expenses exceed its earnings. As recently as 2024, the CFPB took the position in other litigation that the “plain meaning” of “combined earnings . . . refers to the System’s income.”… Fed Chair Jerome Powell reiterated this interpretation in testimony before Congress; he explained that the Fed is “required to make those payments” even when the Fed is operating at a loss… Chair Powell reported that the Federal Reserve has never denied a CFPB funding request because “we don’t have authority under the law to do so.”… Moreover, the Congressional Budget Office also recently recognized that the Federal Reserve should continue to transfer money to the CFPB even though the Fed has been operating at a loss…”[2]
Additional appellate hearings will continue into the wider question of planned RIFs in NTEU v. Vought. However, this opinion serves as a fascinating detour into the continued legal questions regarding the CFPB’s funding mechanisms, even after the Supreme Court ruled that it was legally permissible.[3] According to the District Court, Acting Director Vought and the CFPB may not use the OLC Memo’s interpretation relative to funding the CFPB. Therefore, the industry should pay attention to further developments from the CFPB, OLC, and this case into the New Year.
[1] NTEU v. Vought, Memorandum Opinion & Order, December 30, 2025, pp. 2.
[2] NTEU v. Vought, Memorandum Opinion & Order, December 30, 2025, pp. 22-23.
[3] CFPB v. CFSA
About the author
Ryan Labriola is a Senior Manager with Asurity Advisors. Ryan has expertise in military lending laws and regulations, including the Servicemembers Civil Relief Act and the Military Lending Act. He has advised financial institutions and non-bank lenders on SCRA and MLA compliance, and has participated in significant lookback and remediation engagements relating to servicemembers’ benefits and protections under federal and state law.