On Monday, California joined 20 other states and the District of Columbia in a lawsuit that seeks to prevent the Trump administration from divesting and closing the federal Consumer Financial Protection Bureau.
The lawsuit, filed by the Democratic attorney general in U.S. District Court in Eugene, Oregon, accuses acting director Russell Vought of attempting to unlawfully withhold agency funds by illegally interpreting its funding charter. The agency itself and the Board of Governors of the Federal Reserve System are also named as defendants.
“For California, the CFPB has been an invaluable law enforcement partner, working hand-in-hand with our office to protect wallets and stop unfair business practices. But the Trump Administration is once again seeking to weaken and ultimately dismantle the CFPB,” California Atty. General Rob Bonta said this at a press conference announcing the Lawsuit on 41 pages.
The lawsuit argues that the agency is critical to states fulfilling their own mission to protect consumers and that closing it would deny them legally guaranteed access to the bureau's database, which tracks millions of consumer complaints, as well as other data.
The agency did not immediately respond to a request for comment on the lawsuit filed by Bonta and the attorneys general of Oregon, New York, New Jersey and Colorado.
Created by Congress in 2010 after subprime mortgage abuse leading to the financial crisis, the agency is funded by the Federal Reserve as a method to insulate it from political pressure.
Dodd-Frank Act The statute requires the director of the agency to petition for a reasonable amount of funding to carry out the CFPB's duties from the “aggregate income” of the Federal Reserve System.
Until this year, this was interpreted as the Federal Reserve's gross income. But conclusion of the Ministry of Justice statements that should be interpreted as meaning the Federal Reserve is making profits, which it does not have because it has been operating at a loss since 2022. The lawsuit claims the interpretation is bogus.
“Defendant Russell T. Vought has worked tirelessly to shut down the CFPB by any means necessary, denying Plaintiffs access to CFPB resources to which they are legally entitled. In this action, Plaintiffs challenge Defendant Vought's latest attempt to do so,” the federal lawsuit states.
The complaint alleges the agency will run out of cash by next month if the policy is not rescinded. Bonta said he and the other attorneys general have not yet decided whether they will seek a restraining order or temporary injunction to change the new funding policy.
Before the second Trump administration, the CPFB was boasted nearly $21 billion returned to consumers throughout the country through coercive measures, including vs. Wells Fargo in San Francisco due to a scandal involving the creation of accounts that customers were never looking for.
Other major cases have been filed against him student loan service Navient for incorrect payments and other issues, as well as Toyota Motor Credit for charging higher interest rates for black and Asian clients.
However, the agency stopped noteworthy cases this year. He terminated early the consent decree reached with Citibank in connection with allegations of his discriminate against clients with Armenian surnames in Los Angeles County.
It also threw everything awayavoid against the cage which accused Wells Fargo, JPMorgan Chase, Bank of America and other banks of rushing a payment app that resulted in $870 million in fraud-related user losses. The app denied the allegations.
Vought was chief architect of the 2025 projectthe Heritage Foundation's plan to reduce the size and power of the federal bureaucracy during the second Trump administration. In February, he ordered the agency to stop almost all of its work and has been trying to sharply downsize its workforce ever since.
The lawsuit, filed Monday, is the latest legal effort to keep the agency in business.
The lawsuit was filed in February. National Treasury Union and consumer groups blame the Trump and Vought administration in an attempt to unconstitutionally dismantle an agency created by an act of Congress.
“This is deflation, and it is a shame that Congress does not protect the power of the purse,” Colorado Atty. General Philip Weiser said this at a press conference on Monday.
“On other occasions, Congress has been vigilant in guarding its authority, but because of political polarization and fear of criticizing this president, Congress is not doing so,” he said.
