The CFPB filed the notice in NTEU v. Vought to inform the court of the binding OLC determination. The legal opinion states that the Bureau may not draw funds from the Federal Reserve under its current statutory funding mechanism because the Fed has no combined earnings from which to draw.
Under the Dodd-Frank Wall Street Reform Act, the CFPB is authorized to request up to a specified percentage of the Federal Reserve's total operating expenses. This funding structure was designed to insulate the consumer protection agency from the traditional congressional appropriations process.
The OLC opinion represents a significant constraint on the agency's unique funding model. OLC opinions are binding upon Executive Branch agencies, including the Bureau.
Despite the funding restriction, the CFPB stated it anticipates having sufficient funds to continue operations until at least December 31, 2025. The agency did not specify what alternative funding sources it might pursue or whether it would challenge the OLC determination.
The funding issue arises amid ongoing litigation over the CFPB's constitutional structure and funding mechanism. The Supreme Court previously upheld the CFPB's funding structure against constitutional challenges in CFPB v. Community Financial Services Association of America.
The timing of the OLC opinion appears connected to the Federal Reserve's recent financial position. The central bank has faced operating losses due to its monetary policy operations and the interest it pays on reserves held by commercial banks. These losses have affected the Fed's remittances to the Treasury and its combined earnings available for CFPB funding.