Maryland Attorney General Joins Lawsuit to Protect Consumer Financial Protection Bureau Funding

Maryland Attorney General Anthony G. Brown has joined a coalition of state attorneys general in filing a lawsuit against the Trump administration to prevent the complete defunding of the Consumer Financial Protection Bureau (CFPB). This legal action aims to safeguard the agency’s critical consumer protection functions, which have historically recovered billions of dollars for American consumers. The CFPB’s current acting director, Russell Vought, has reportedly ceased requesting funding from the Federal Reserve, a move that could lead to the agency running out of money by January 2026.

Attorneys General Brown and the coalition contend that this attempt to defund the CFPB is unlawful and will have detrimental consequences for consumers. They argue that the agency has a statutory and constitutional obligation to collect and process consumer complaints and to share this vital data with state agencies. This information is essential for states to investigate fraud, discrimination, and predatory lending practices, and to pursue restitution for affected consumers. The lawsuit seeks a court order to halt the administration’s actions and ensure the CFPB continues to receive necessary funding.

The CFPB, established following the 2008 Great Recession, operates as an independent federal agency funded by the Federal Reserve. Its mandate includes creating and enforcing regulations for financial institutions, gathering economic data, and processing millions of consumer complaints annually. It is the sole federal body tasked with overseeing the consumer protection law compliance of the nation’s largest banks. Beyond its direct enforcement actions, the CFPB is legally bound to provide crucial data to states, which they use to support their own consumer protection initiatives. For instance, states utilize Home Mortgage Disclosure Act data collected by the CFPB to identify and combat discriminatory lending practices. Maryland, in particular, has referred a significant number of consumer complaints to the CFPB, highlighting the agency’s role as a vital partner in addressing financial misconduct.

The legal challenge stems from an assertion made by Acting Director Vought in November, suggesting the CFPB can only be funded by the Federal Reserve’s “profits,” which he claims are currently nonexistent. This position has led to the decision not to seek any funding, thereby imperiling the agency’s future. The attorneys general argue that this decision not only violates federal law but also infringes upon the constitutional principle of the separation of powers, as Congress established the CFPB and its funding mechanism. The lawsuit seeks to compel the administration to request the legally mandated funding from the Federal Reserve, thereby ensuring the agency can continue its essential work.

Joining Maryland in this legal effort are the attorneys general from Arizona, California, Colorado, Connecticut, Delaware, the District of Columbia, Hawaiʻi, Illinois, Maine, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, New York, North Carolina, Oregon, Rhode Island, Vermont, and Wisconsin. The coalition’s unified action underscores the widespread concern among states regarding the potential impact of defunding the CFPB on their ability to protect consumers.

This lawsuit will directly impact Maryland consumers by aiming to preserve an agency that has historically returned billions of dollars to individuals who have been victims of financial fraud and predatory practices. The continued operation of the CFPB will ensure that state agencies, including the Maryland Attorney General’s office, retain access to crucial complaint data and resources necessary for investigating and prosecuting financial crimes. Residents who have experienced issues with financial products or services can continue to report these problems, knowing that an established federal agency and their state’s consumer protection efforts will be supported.

Article by Mel Anara, based upon information from the Maryland Attorney General’s Press Office.

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