New Jersey co-leads multistate suit over Trump move to defund Consumer Financial Protection Bureau

The big picture: New Jersey is co-leading a 22-state lawsuit to block the Trump administration from cutting off all funding to the Consumer Financial Protection Bureau (CFPB).

Why it matters: The coalition says the move would shut down the CFPB as soon as January 2026, weakening protections for consumers and disrupting state enforcement efforts that rely on CFPB data and complaints.

What they’re saying: Attorney General Matthew Platkin accuses the administration of trying to gut the CFPB to benefit “unscrupulous businesses” and rewrite federal law.

What’s next: The lawsuit seeks a court order forcing the administration to request funding from the Federal Reserve so the CFPB can continue its work.

New Jersey is co-leading a coalition of 22 attorneys general suing to stop the Trump administration from cutting off all funding to the Consumer Financial Protection Bureau, Attorney General Matthew Platkin announced Monday.

The lawsuit argues that the administration is violating federal law by refusing to request any funding for the CFPB from the Federal Reserve, a move that would “virtually guarantee” the agency runs out of money in January 2026.

Platkin said the action comes at a time when consumers are already struggling with rising costs.

“While consumers are facing an affordability crisis, the Trump Administration has spent the last several months currying favor with billionaires by trying to gut the CFPB and give unscrupulous businesses free reign to exploit and abuse consumers,” Platkin said. “t is unconscionable that the Trump Administration is trying to re-write federal laws to support their extreme crusade against consumer protection laws and ordinary consumers.

He said the CFPB is a critical partner in working to keep costs down for consumers and protect them from predatory businesses.

Founded after the Great Recession, the CFPB is an independent agency funded entirely by the Federal Reserve. It regulates financial institutions and products, writes and enforces consumer financial protection rules, collects economic data, and handles millions of consumer complaints each year. It is the only federal agency authorized to supervise the nation’s largest banks for compliance with consumer financial protection laws.

According to the announcement, the CFPB has returned more than $21 billion improperly taken from over 205 million Americans in its 14 years of existence, and states, including New Jersey, routinely partner with the bureau on investigations and enforcement.

State officials say defunding the CFPB would cripple that work. The bureau is legally required to provide states with vital information, including consumer complaints and lending data, which are used to investigate wrongdoing, secure refunds and restitution, and support state enforcement actions.

The CFPB collects demographic and geographic lending data under the Home Mortgage Disclosure Act. The information is used to protect homebuyers from discriminatory lending.

New Jersey has joined with the CFPB and other states on large-scale investigations, including a $2.1 billion settlement with Ocwen Financial Corporation over mortgage servicing misconduct, and a coordinated investigation and settlement over mortgage redlining by Trident Mortgage Company that targeted minority applicants in New Jersey.

The attorneys general argue that eliminating funding for the CFPB will wipe out a key resource for resolving consumer complaints and “securing justice for cheated consumers.”

In November, according to the announcement, the Trump Administration took the position that the agency can only be funded by the Federal Reserve’s “profits,” which it asserted are currently nonexistent. As a result, Vought has decided not to request any funding from the Federal Reserve, making it “all but certain” that the CFPB will run out of money in January 2026.

The multistate lawsuit contends that the decision not to seek any funding is unlawful and unconstitutional. The attorneys general are asking a court to block the administration from carrying out its decision, and to order the agency to request the funding needed from the Federal Reserve to fulfill its duties under federal law.

Platkin co-led the lawsuit with attorneys general from New York, Oregon, Colorado and California. Joining them are attorneys general from Arizona, Connecticut, Delaware, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Mexico, North Carolina, Rhode Island, Vermont, Wisconsin and the District of Columbia.