Key Implications if the CFPB Is No Longer Operational

In a pending case brought by the union representing CFPB employees, the Administration has informed the court that CFPB will run out of funding early next year and that the Administration will not seek additional funding for the agency.

This memorandum examines the implications for the CFPB’s key functions – rulewriting, supervision, enforcement, and publication of market data – should the agency cease operations in early 2026.

1. Rulewriting Authority

The Dodd-Frank Act provides the CFPB with exclusive authority to prescribe rules implementing federal consumer financial laws. These laws include ECOA, EFTA, FDCPA, FCRA, HMDA, RESPA, SAFE, TISA, and TILA, as well as the Consumer Financial Protection Act, which includes UDAAP and consumer rights to access information (Section 1033 of the Dodd-Frank Act).

No agency has backup authority to write rules pursuant to these authorities for all market participants. Therefore, if CFPB ceases operations, rules for which it has exclusive authority would be frozen in place. Other agencies – state and federal – are charged with enforcing these rules but cannot formally interpret or amend them.

Pending Rules

CFPB is actively reviewing amendments to several existing rules that are within the exclusive jurisdiction of the agency. If changes to these rules are not finalized before the agency closes, the existing rules would remain in force. These pending rules include:

• Reconsideration of the 1033 rulemaking, which would reopen issues relating to - who can be a “representative” making a request on behalf of the consumer; the approach to the assessment of fees to defray the costs incurred by a “covered person” in responding to a customer driven request; data security; and data privacy. An advance notice of proposed rulemaking was issued in August, and reportedly the CFPB is working on a proposed rule.
• Amendments to the Regulation B/ECOA rule (removing the effects test/disparate impact to prove violations, narrowing what constitutes discouragement, and eviscerating special purpose credit programs). A proposed rule was issued in November, with comments due December 15^th.
• Amendments to the Small Business Rule/1071 Rule to reduce the number of reporters by 90 percent (although the proposed rule anticipates that 90 percent of loan originations still would be covered) by excluding merchant cash advances, agricultural lending, and small dollar loans, and by raising the reporter thresholds. Additionally, the number of data points would be reduced. A proposed rule was issued in November, with comments due December 15^th.
• Amendments to several rules on larger participants by raising the threshold to be a covered participant, which could have the effect of reducing supervision of nonbanks. These rules have been proposed, but not finalized. Additionally, there is a proposal on the legal standard applicable to supervisory designation proceedings.
• Amendments to the rules applicable to the Civil Penalty Fund, so that funds for victims that cannot be found could be used for purposes other than education and financial literacy. A proposed rule was issued in June.

The CFPB also has several other rulemakings on its semi-annual regulatory agenda that may or may not receive attention before a shutdown.

Inflation Adjustments

Under certain statutes, the CFPB is required to adjust certain thresholds for inflation. Also, under various authorities, the CFPB has promulgated rules that require annual adjustments in certain fees and thresholds, including those relating to the definition of small business in the 1071 rule, the exemption for consumer leases, civil penalties, and various thresholds and fees in Regulation Z. If the CFPB is not operational, these thresholds would be frozen in place. For example, without an adjustment for inflation, more consumer loans will become subject to Regulation Z disclosures, and more mortgage loans will become treated as high cost mortgages.

2. Supervision

Large Banks

The CFPB has exclusive authority to supervise depository institutions with total assets of more than $10 billion for compliance with federal consumer financial laws. While the statute requires the Bureau to coordinate with the prudential regulators and state banking regulatory authorities in examinations and requiring reports, those agencies do not have general back-up authority to examine for compliance with federal consumer financial laws. Thus, in the event the agency ceases to function, these institutions would no longer be subject to consumer compliance examinations by the CFPB.

It is possible that, if the CFPB ceases operations, the federal prudential banking regulators will take the position that it is within their safety and soundness supervisory authority to examine for compliance with consumer laws. Separately, the prudential regulators have authority to examine for compliance with UDAP under the FTC Act. Thus, the federal banking agencies may find ways to examine for consumer compliance, through a combination of safety and soundness and UDAP authority.

Certain Nonbanks

The CFPB supervises certain nonbanks, including mortgage originators and servicers, payday lenders, student lenders, and larger participants in certain markets, for compliance with federal consumer financial laws. The CFPB must use existing reports that have been provided to a federal or state agency, but no agency has backup examination authority of these entities for compliance with federal consumer financial laws. If the CFPB is no longer operational, these entities will not be examined for compliance with these laws.

3. Enforcement

Under the Dodd-Frank Act, the CFPB has primary enforcement authority with respect to the federal consumer financial laws for the entities it supervises (large depository institutions and certain nonbanks). Thus, if the CFPB is no longer operational, enforcement actions likely will diminish. They will not cease entirely, however, because state AGs and the Federal Trade Commission have their own enforcement powers, as do the prudential banking agencies.

Under Dodd-Frank, any federal agency authorized to enforce a federal consumer financial law may refer a matter to the CFPB, but it is in CFPB’s sole discretion as to whether to pursue it. If, however, the CFPB does not pursue the referral, a federal agency may exercise back-up enforcement authority by initiating enforcement actions and exercising supervision with respect to that action. Arguably, if the CFPB is not operational, that is functionally the same as the CFPB not pursuing an action, and the prudential regulator may proceed with its enforcement action.

Additionally, the individual federal consumer protection laws detail administrative enforcement. For example, under TILA, the CFPB has authority to enforce it for non-banks and large depository institutions, while the prudential regulators have enforcement authority for smaller depository institutions. In addition, the FTC and the state attorneys general can enforce the Consumer Financial Protection Act (however the authority to enforce the CFPA against national banks and federal thrifts is more limited). Also, several of these laws include a private right of action. Additionally, states have their own consumer financial protection laws, and it is likely states’ enforcement efforts would increase in the absence of the CFPB.

Recently, in anticipation of a potential shutdown, there have been reports that the CFPB is transferring a handful of enforcement actions and pending litigation to DOJ, although the authority to do so is not entirely clear. The CFPB seems to be relying on the fact that DOJ has litigation authority for all laws. However, this ignores the caveat that DOJ is charged with the conduct of litigation in which the United States or an agency is a party “except as otherwise authorized by law,” and Dodd-Frank otherwise provided for the CFPB to have the authority to litigate. The Dodd-Frank Act does not expressly provide backup authority to DOJ to enforce or otherwise interpret federal consumer financial laws. Indeed, in creating the CFPB, the Dodd-Frank Act gave the CFPB independent litigating authority to bring civil actions, while providing that the CFPB notify and coordinate with DOJ so as not to create conflicts or impede the ability of DOJ to bring criminal actions.

4. Market Data

The CFPB maintains and publishes market data for a variety of purposes, and access to this data would be affected by an agency shutdown.

APOR

On a weekly basis, the CFPB publishes the Average Prime Offer Rate (APOR), which is based on survey data for eight mortgage products. The CFPB has long published these rates which serve as the basis for determining regulatory compliance with certain mortgage rules, including determining if a mortgage is a high cost mortgage (12 C.F.R. § 1026.32), higher priced mortgage (12 C.F.R. § 1026.35), higher priced covered transaction for purposes of the ability to repay rule (12 C.F.R. § 1026.43) and how the mortgage should be reported for HMDA reporting (12 C.F.R. pt. 1003). Whether a loan meets certain criteria also may affect eligibility for certain securitizations. In July 2025, the Intercontinental Exchange (ICE) began making ICE APOR available through its platform. Thus, if the CFPB ceases to publish APOR, mortgage lenders may have access to an alternative or may calculate APOR themselves. No statutory or regulatory change is needed, although compliance may be more expensive and more difficult.

HMDA

The CFPB’s collection, processing, and publication of HMDA data is electronic, and the CFPB makes HMDA data available on its website and on the website it manages on behalf of the FFIEC.

HMDA data provides the public with information on the home mortgage lending activities of particular reporting entities and on activity in their communities. These disclosures are used by local, state, and federal officials to evaluate housing trends and issues and by community organizations to monitor financial institution lending patterns. HMDA data is also used, in conjunction with other sources, in connection with the National Mortgage Database, which provides loan-level data on mortgages for research and other purposes. Additionally, HMDA data has been used by the federal supervisory agencies in their fair lending and CRA examinations.

By statute, HMDA data is submitted to the Bureau or the appropriate regulator, and CFPB is charged with promulgating rules on the format, collection and submission of the data. Regulation C implements the requirement to submit to the appropriate regulator. In practice, the regulator charged with implementing HMDA has collected HMDA data on behalf of all the agencies and each federal regulator charged with collecting the data contributes to the cost of the collection process. And, HMDA disclosures are made public on the FFIEC’s website.

If the CFPB is not operational, the collection of HMDA data would need to be transferred to another agency or agencies, and the transition could be difficult from an operational standpoint – even though no regulation or statute prohibits such a transition. Any gaps in collection could affect the transparency of mortgage data used by the mortgage markets, the public, and governmental agencies. Additionally, these agencies would be unable to make any modifications to the format, collection or submission of the data.

Credit Card Databases

TILA requires electronic posting of credit card agreements and submission to the CFPB. The CFPB’s regulations set forth who must submit agreements to the database. The CFPB also produces a semi-annual Terms of Credit Card Plans (TCCP) survey, comparing terms on over 150 issuers.

If the CFPB is not operational, it is unclear how issuers would comply with the requirement to submit agreements unless this function is otherwise transferred by an amendment to TILA. Nor is it clear how the TCCP would be produced, and it would become more difficult to compare credit card terms.

Other Databases

The CFPB also maintains databases relating to prepaid card agreements, auto loan credit terms, and other topics. The absence of these reports could also affect market transparency.

Reports

The Dodd-Frank Act mandated that the CFPB produce certain reports, such as those relating to semi-annual reports to Congress, annual reports on fair lending, consumer response, financial literacy, remittances, and ombudsman activities. Further, certain specific statutes require annual reporting on all regulators’ violations.

If the CFPB is not operational, these reports likely will not be made, unless Congress designates, by statute, another regulator to have the authority for administering the relevant regulation and the related reporting requirements. The last time that such a transfer happened in the consumer financial regulatory space was in the Dodd-Frank Act when the CFPB assumed responsibility for administering regulations from a number of agencies, including from the Federal Reserve (the prior administrator for ECOA, HMDA, TILA, EFTA).