Michigan Attorney General Dana Nessel has joined a group of state attorneys general in filing a lawsuit against the Trump administration to prevent the defunding of the Consumer Financial Protection Bureau (CFPB). The lawsuit responds to actions by Russel Vought, the CFPB’s acting director, who has chosen not to request funding from the Federal Reserve. This move is expected to deplete the agency’s funds by January 2026.
Nessel and her counterparts argue that eliminating CFPB funding would harm consumers and hinder states’ abilities to protect residents from financial misconduct. They maintain that the CFPB is legally required to collect and process consumer complaints and share this information with states. Without adequate funding, these functions would cease.
“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.”
The CFPB was created after the Great Recession as an independent agency funded by the Federal Reserve. Its responsibilities include regulating financial institutions, enforcing consumer protection laws, collecting economic data, and processing consumer complaints. It also supervises major banks for compliance with these laws.
States rely on data from CFPB complaints for their own investigations into financial wrongdoing, securing refunds for consumers, and supporting litigation against financial institutions. For example, under the Home Mortgage Disclosure Act, CFPB collects lending data used by states to address discriminatory practices in home lending.
In Michigan, where strict legal limitations can make investigations more difficult, access to CFPB resources is especially important. A 2023 report indicated that before recent administrative changes began affecting its operations, CFPB had acted on over 90,000 complaints from Michigan residents.
Earlier this year, Nessel held a press conference with former CFPB Director Rohit Chopra, State Representative Kelly Breen, and local consumer advocates to discuss concerns about ongoing enforcement actions being dropped following administrative changes.
Vought’s recent stance asserts that only profits from the Federal Reserve can fund the agency—a claim he says cannot be met at present—leading him not to request any new funds. The coalition contends this decision is both unlawful and unconstitutional because Congress established a process for regular funding of the agency when it created it.
Nessel and other attorneys general are seeking a court order requiring Vought to request necessary funds so that CFPB can continue its mandated duties. The lawsuit includes participation from attorneys general representing Arizona, California, Colorado, Connecticut, Delaware, Washington D.C., Hawai‘i, Illinois, Maine, Maryland, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, North Carolina, Oregon, Rhode Island, Vermont, and Wisconsin.
