Judge orders feds to restore consumer watchdog funding

A federal judge in Oregon ruled that Russell Vought, acting director of the Consumer Financial Protection Bureau, violated federal law and the separation of powers by refusing to request funding for the agency, effectively starving it. Twenty-two states had sued Vought, the bureau, and the Federal Reserve's Board of Governors, arguing the Dodd-Frank Act requires the director to request the Fed's 'combined earnings' needed to run the bureau.

Vought had claimed he couldn't request funds because the Fed's interest expenses exceeded its income, reversing a decade of prior practice; the court rejected that reading, siding with the states that 'combined earnings' means revenue before expenses. Judge Ann Aiken called the decision not a tentative statement but a discrete final action, and vacated both of Vought's determinations, ordering funding restored.

The bureau, created after the 2008 financial crisis, has returned over $20 billion to consumers, according to the plaintiff states. Federal defendants argued the case was moot after the Fed returned to profitability, an argument Aiken said didn't address whether Vought had the authority to make that call unilaterally in the first place.

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