A federal judge ruled on September 25, 2026, that the Consumer Financial Protection Bureau must ask the Federal Reserve for its funding and that the Fed must pay it out of gross revenue, before expenses. Judge Ann L. Aiken of the US District Court for the District of Oregon granted partial summary judgment to 22 states and the District of Columbia in State of New York v. Vought.
The order vacates two decisions by Russell Vought, then the bureau’s acting director: that he cannot request funds from the Fed whenever its interest expenses exceed its income, and that he would request nothing for fiscal year 2026. Aiken declared both contrary to law, an unlawful withholding of agency action, and a violation of the separation of powers.
Gross revenue, not profit
The case turned on two words in the Dodd-Frank Act. Under 12 U.S.C. § 5497(a)(1), the Fed must transfer to the bureau, “from the combined earnings of the Federal Reserve system,” the amount the director determines to be reasonably necessary. On November 7, 2025, the Justice Department’s Office of Legal Counsel read “combined earnings” as profits, net of interest expenses. The Reserve Banks’ expenses had exceeded their income since the Fed raised rates in late 2022, so on November 20, 2025, Vought told the president and Congress the available amount was “legally $0.”
Aiken rejected that reading, as two other federal courts had. Relying on dictionaries and on the statute’s purpose, she held that “combined earnings” means the Fed’s “gross revenues without any deduction for its expenses,” from which the Fed “is required” to transfer the amount the CFPB director deems reasonably necessary.
The government argued the case was moot because the Fed had apparently returned to profitability. Aiken answered that the states challenge the director’s claimed power to decide that question on his own. “A possible return to profitability does nothing to resolve this issue,” she wrote.
A duty to ask, and a constitutional finding
Aiken also held that the mandatory “shall” in the statute carries a duty for the director to communicate the bureau’s funding needs to the Fed; otherwise, a director could block a mandatory transfer simply by staying silent. On the constitutional claim, she found that Vought had “arrogated to himself the ‘power of the purse,’ which belongs exclusively to Congress.”
Two earlier rulings, both on appeal
On December 30, 2025, the US District Court for the District of Columbia, in a suit brought by the National Treasury Employees Union (NTEU), a federal workers’ union, held that refusing to request funds violated its preliminary injunction. Vought then requested $145 million for the second quarter of fiscal 2026, under protest. On March 13, 2026, the Northern District of California ruled for nonprofit groups in Rise Economy v. Vought. Both cases are on appeal.
The Oregon order decides the merits, where the NTEU ruling applied an interim injunction. Unlike the Rise Economy plaintiffs, the states brought a claim for agency action unlawfully withheld under 5 U.S.C. § 706(1), which Aiken upheld, and named the Fed’s Board of Governors as a defendant, for purposes of relief. Neither earlier court considered the separation of powers.
No dollar amount and no injunction for fiscal 2026
The order sets no dollar figure. That call falls to the director, now Mark Paoletta, acting director since August 1, 2026, according to the bureau’s website; the California attorney general’s office said the ruling means he must request the funding. With fiscal 2026 about to end, Aiken declined to issue an injunction on that year’s funding. California said the order resolves the suit “in large part,” pending appeal; an appeal would go to the Ninth Circuit, which already has Rise Economy.
Funding for the agency that writes Regulation E
The bureau issues Regulation E, which carries out the Electronic Fund Transfer Act. The act sets the rights, liabilities, and responsibilities of consumers who use electronic fund transfer and remittance transfer services, and of the financial institutions and others that offer them. The case decides whether the agency that writes that rule keeps the standing funding outside annual appropriations that Congress gave it and the Supreme Court upheld in 2024. The court also found that without funding, the system through which states receive consumer complaints would shut down.