(The Center Square) – Democratic attorneys general from 22 jurisdictions sued the Trump administration Monday over its plans to defund the Consumer Financial Protection Bureau.
“We won’t stand by as consumer protections are dismantled,” California Attorney General Rob Bonta said during a virtual news conference Monday with the attorneys general from Oregon, Colorado and New Jersey.
“The Trump administration’s latest effort to destroy the CFPB means that hundreds of thousands of consumer complaints will fall on deaf ears,” Bonta said. “If you have ever had issues with your car loan, mortgage loans or bank fees, if you have ever disputed a credit score error and expected to have the federal government on your side, this impacts you.”
The attorneys general emphasized the CFPB’s success in getting back $20 billion across the nation into the pockets of consumers who were treated unfairly by businesses.
“The CFPB is the only federal agency authorized to supervise the nation’s largest banks for their compliance with the federal consumer financial protection laws,” according to the suit, filed Monday in the U.S. District Court for Oregon in Eugene.
The CFPB gave notice on Nov. 10 that it would not request funding from the Federal Reserve to continue its operations. The bureau also said it had enough money to continue to operate until at least Dec. 31, after which it’s expected to close its operations.
The lawsuit challenges CFPB Acting Director Russel Vought’s refusal to request necessary funding from the Federal Reserve. The bureau’s action was based on a U.S. Department of Justice analysis that said money is taken from the Federal Reserve’s profits, which currently don’t exist.
The lawsuit says the Dodd-Frank Act refers to the Federal Reserve’s gross revenues, not the profits. The suit refers to Federal Reserve Chair Jerome Powell’s testimony before the Senate Committee on Banking, Housing and Urban Affairs that the Federal Reserve is required to fund the bureau even when the reserve is operating at a loss.
The suit argues Vought’s decision is contrary to congressional mandates and violates the Administrative Procedure Act and the U.S. Constitution.
Congress, not the Trump administration, holds the power of the purse, attorneys general said during Monday’s news conference.
“We’re defending Congress,” Colorado Attorney General Phil Weiser said. “We have to act because Congress isn’t acting.”
The Center Square reached out to the White House Monday, but did not get a response before press time.
California, Colorado, Oregon, New Jersey and New York are the states leading the coalition. The other plaintiffs are the attorneys general of Arizona, Connecticut, Delaware, the District of Columbia, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Nevada, New Mexico, North Carolina, Rhode Island, Vermont and Wisconsin.
In other litigation news Monday, Bonta discussed the lawsuit challenging California’s congressional redistricting measure, Proposition 50. The case, filed by plaintiffs such as state Assemblymember David Tangipa, R-Fresno, and the U.S. Department of Justice, was heard by a three-judge panel last week in the U.S. District Court for Central California in Los Angeles.
“I think we’re going to get a ruling soon,” Bonta said, answering a question from The Center Square. “I think the evidence came in very well for the state of California for the durability and sustainability and legality for Proposition 50.”
He said he believes the federal judges will rule that proposition is a political-partisan gerrymander, which is legal, and not a racial gerrymander, which is illegal.
Tangipa told The Center Square he expects the case to go all the way to the U.S. Supreme Court.
If that happens, California will likely prevail, based on the U.S. Supreme Court’s ruling upholding congressional redistricting in Texas, Bonta said. He pointed to Justice Samuel Alito’s comments in a concurring opinion that described the California redistricting as a political-partisan gerrymander.
The Democratic supermajority in the California Legislature proposed the new congressional districts to pick up five Democratic seats in the U.S. House during the 2026 midterm election. That’s intended to offset the five seats that Texas Republicans expect to pick up in the same election after that state’s redistricting.
