The CFPB is apparently rushing to address the problems posed by it supposedly running out of funding in early 2026: it is looking at taking steps to expedite a revision of the 1033 open banking rule and also trying to find a way to outsource the calculation of the Average Prime Offer Rate (APOR) to private parties. Good luck with that during the holiday season. 

All of this suggests that Russ Vought’s hit squad didn’t properly coordinate with the folks who actually know what the Bureau has to do (to the extent anyone’s even left in the building). 

But let’s go back to the OLC opinion letter claiming that the Bureau does not have a right to draw funds on the Fed when the Fed isn’t running a profit. Two related things are very strange about the OLC opinion letter (besides its specious reasoning).

First, why did the OLC even issue an opinion letter? The OLC only issues such letters upon request, meaning the Russ Vought went and asked OLC for a letter. And I’ve got to think that the letter was only going to be issued if it said what Vought wanted. Why did Vought ask for a letter when the CFPB had already itself analyzed the issue and concluded that funding from the Fed was legal? 

Second, why did the OLC opinion letter not address the legality of Bureau activities after the Fed stopped running a profit? It’s hard to escape the implication that if the Bureau lacks legal authority to draw on the Fed come Feb. 2026 that it also lacked that authority at all points since late 2022. Shouldn’t the OLC have ordered “pencils down” for the entire CFPB if its funding were illegal? I really struggle to see how the Bureau’s funding can be illegal, but only going forward once its current (supposedly illegal) draw is exhausted. It doesn’t take a high-level legal mind to see the problem. That leaves me wondering if Vought requested the OLC not to address this inconvenient matter. 

Here’s the problem, though: Vought is trying to have it both ways. On the one hand he wants to asphyxiate the Bureau by cutting off its funding. But on the other, he (or his underlings) have now realized that doing so will create a mess and are rushing to find a solution to the APOR and to get the 1033 rulemaking done.

The sad truth is that the OLC opinion letter opens the door to legal challenges to everything the Bureau has done since late 2022. I assume that most courts will be inclined to let sleeping dogs lie on a “justified reliance” theory. But that theory should only hold for CFPB actions between late 2022 and the issuance of the OLC opinion letter. Once that letter came out, everyone was on notice that the Bureau might not be properly funded. That means that any APOR fix, any 1033 revision, the Reg B rulemaking, and the 1071 rulemaking are all open to challenge on the grounds that the Bureau was operating illegally.

What’s so stupid about this is that Vought didn’t need to push things this far. He’s already hobbled the Bureau. It won’t be doing anything for the rest of the Trump administration, and it has already lost so much of its human capital and institutional memory that even if Dems regain the White House it won’t be able to function at full force for years. By overreaching, however, Vought might be undermining some of the very deregulation he hoped to achieve.