WASHINGTON — The Justice Department has formally asked Federal Reserve Chair Jerome H. Powell to clarify whether the central bank has returned to profitability — a question at the center of a fierce dispute over funding for the Consumer Financial Protection Bureau, according to a new report.
Assistant Attorney General Brett Shumate said in a letter that a recent Justice Department opinion concluded the CFPB cannot lawfully request funding from the Federal Reserve while the central bank has “no profits.” The DoJ cited media reports suggesting the Fed may be returning to profitability and it asked the Fed to confirm whether the Fed has “combined earnings” under the Trump administration’s definition and anticipates sustained earnings in the coming week, according to Reuters.
As the CU Daily has been reporting, unlike most federal agencies, the CFPB is funded through quarterly transfers from the Federal Reserve rather than annual congressional appropriations. The Trump administration has argued that because the Fed has operated at a loss for recent years, it has no profits from which to fund the CFPB. Reuters noted that view has been contested by legal experts and consumer advocates.
Job Cuts Threatened
The CFPB, which the Trump administration has been seeking to shut down, has warned it could exhaust its remaining funds within weeks and has cautioned staff about possible job cuts. The agency also faces lawsuits seeking to compel it to resume requests for Federal Reserve funding, the Rueters report added.
Supporters of the CFPB have argued the central bank’s profit status should not bar funding for the consumer watchdog, and point to a 2024 Supreme Court ruling that upheld the constitutionality of the bureau’s unique funding mechanism.
