Michigan Attorney General Dana Nessel has joined a coalition of attorneys general in suing the Trump administration to stop the complete defunding of the Consumer Financial Protection Bureau (CFPB), which has returned more than $21 billion improperly taken from over 205 million Americans throughout its 14-year existence. The CFPB’s current acting director, Russel Vought, is attempting to completely defund the agency by refusing to request any funding from the Federal Reserve, which will virtually guarantee the agency runs out of money in January 2026. As Nessel and the coalition argue, this will have devastating impacts on consumers and severely disrupt states’ consumer protection abilities, which rely on consumer complaints and data from CFPB. Nessel and the coalition argue that CFPB has a legal requirement to collect and process consumer complaints and share that complaint data with states, and that Vought’s actions violate the law and the Constitution. The lawsuit seeks a court order preventing the administration from completely defunding CFPB.
“Defunding the CFPB will be disastrous for the millions of working families this federal bureau defends every day from deceptive and predatory financial institutions and corporations,” Nessel said. “The Trump administration does not have the authority to illegally and unilaterally defund it by simply refusing to do its job.”
Established in the wake of the Great Recession, CFPB is an independent agency funded entirely by the Federal Reserve focused on regulating financial institutions and products to protect consumers. The CFPB writes and enforces rules to regulate financial institutions, collects critical economic data, and fields millions of consumer complaints every year. In addition, CFPB is the only federal agency authorized to supervise the nation’s largest banks for their compliance with consumer financial protection laws.
Beyond its own consumer protection actions, CFPB is legally mandated to provide vital information to states to aid their own consumer protection efforts. States rely on consumer complaints from CFPB to investigate wrongdoing, secure refunds and restitution for consumers, and support their own litigation against financial institutions. For example, CFPB collects demographic and geographic lending data under the Home Mortgage Disclosure Act, which states use to protect homebuyers from discriminatory lending.
While the CFPB has worked to protect consumers throughout the nation, that protection is critical to Michiganders. Michigan has the strictest limitations in the U.S., often complicating the investigative process and limiting the recourse the Department can seek on behalf of residents and businesses alike. While Attorney General Nessel has asked the Michigan Supreme Court to reconsider the two previous rulings that hinder the Department’s ability to take action against drug manufacturers and other regulated/licensed entities through a misconstruction of the Michigan Consumer Protection Act, there are legal and practical impediments for the Department complicating any efforts it may take to fill the void for much of the business conduct the CFPB historically targeted. According to a 2023 report from the Center for American Progress, the CFPB took action on more than 90,000 complaints from Michigan residents alone before the current administration began dismantling it earlier this year.
Nessel also hosted a press conference with former CFPB Director Rohit Chopra, State Representative Kelly Breen, and Michigan consumer advocates earlier this year on the importance of the Bureau after the Trump administration dropped a number of ongoing enforcement actions. As Nessel and the coalition argue, completely defunding CFPB will eliminate this important resource for resolving complaints and securing justice for cheated consumers.
In November, Vought took a novel position that the agency can only be funded by the Federal Reserve’s “profits,” which he asserted are currently nonexistent. Vought therefore made the decision not to request any funding from the Federal Reserve, making it all but certain that CFPB will run out of funding completely in January 2026.
Nessel and the coalition argue that Vought’s decision not to seek any funding for CFPB is unlawful and unconstitutional. The CFPB has a legal obligation to provide states with consumer complaints – a duty it will not be able to fulfill without the necessary funds. Completely eliminating CFPB funding also violates the Separation of Powers principle, as the agency was established by Congress, which also created a process for it to regularly receive funding from the Federal Reserve. Nessel and the coalition are seeking a court order preventing the administration from carrying out its decision not to request any funds for CFPB and ordering the agency to request funding from the Federal Reserve to fulfill its duties as required by law.
Joining Nessel in filing this lawsuit are the attorneys general of Arizona, California, Colorado, Connecticut, Delaware, the District of Columbia, Hawai‘i, Illinois, Maine, Maryland, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, North Carolina, Oregon, Rhode Island, Vermont, and Wisconsin.
“Defunding the CFPB will be disastrous for the millions of working families this federal bureau defends every day from deceptive and predatory financial institutions and corporations,” Nessel said. “The Trump administration does not have the authority to illegally and unilaterally defund it by simply refusing to do its job.”
Established in the wake of the Great Recession, CFPB is an independent agency funded entirely by the Federal Reserve focused on regulating financial institutions and products to protect consumers. The CFPB writes and enforces rules to regulate financial institutions, collects critical economic data, and fields millions of consumer complaints every year. In addition, CFPB is the only federal agency authorized to supervise the nation’s largest banks for their compliance with consumer financial protection laws.
Beyond its own consumer protection actions, CFPB is legally mandated to provide vital information to states to aid their own consumer protection efforts. States rely on consumer complaints from CFPB to investigate wrongdoing, secure refunds and restitution for consumers, and support their own litigation against financial institutions. For example, CFPB collects demographic and geographic lending data under the Home Mortgage Disclosure Act, which states use to protect homebuyers from discriminatory lending.
While the CFPB has worked to protect consumers throughout the nation, that protection is critical to Michiganders. Michigan has the strictest limitations in the U.S., often complicating the investigative process and limiting the recourse the Department can seek on behalf of residents and businesses alike. While Attorney General Nessel has asked the Michigan Supreme Court to reconsider the two previous rulings that hinder the Department’s ability to take action against drug manufacturers and other regulated/licensed entities through a misconstruction of the Michigan Consumer Protection Act, there are legal and practical impediments for the Department complicating any efforts it may take to fill the void for much of the business conduct the CFPB historically targeted. According to a 2023 report from the Center for American Progress, the CFPB took action on more than 90,000 complaints from Michigan residents alone before the current administration began dismantling it earlier this year.
Nessel also hosted a press conference with former CFPB Director Rohit Chopra, State Representative Kelly Breen, and Michigan consumer advocates earlier this year on the importance of the Bureau after the Trump administration dropped a number of ongoing enforcement actions. As Nessel and the coalition argue, completely defunding CFPB will eliminate this important resource for resolving complaints and securing justice for cheated consumers.
In November, Vought took a novel position that the agency can only be funded by the Federal Reserve’s “profits,” which he asserted are currently nonexistent. Vought therefore made the decision not to request any funding from the Federal Reserve, making it all but certain that CFPB will run out of funding completely in January 2026.
Nessel and the coalition argue that Vought’s decision not to seek any funding for CFPB is unlawful and unconstitutional. The CFPB has a legal obligation to provide states with consumer complaints – a duty it will not be able to fulfill without the necessary funds. Completely eliminating CFPB funding also violates the Separation of Powers principle, as the agency was established by Congress, which also created a process for it to regularly receive funding from the Federal Reserve. Nessel and the coalition are seeking a court order preventing the administration from carrying out its decision not to request any funds for CFPB and ordering the agency to request funding from the Federal Reserve to fulfill its duties as required by law.
Joining Nessel in filing this lawsuit are the attorneys general of Arizona, California, Colorado, Connecticut, Delaware, the District of Columbia, Hawai‘i, Illinois, Maine, Maryland, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, North Carolina, Oregon, Rhode Island, Vermont, and Wisconsin.
––––––––––––––––––––
Subscribe to the Legal News!
https://www.legalnews.com/Home/Subscription
Full access to public notices, articles, columns, archives, statistics, calendar and more
Day Pass Only $4.95!
One-County $80/year
Three-County & Full Pass also available
