Democratic states sue Trump administration for attempts to defund consumer watchdog agency

The Democratic attorneys general of 21 states and Washington, D.C., are suing the Trump administration for its attempts to defund the Obama-era federal agency created to protect Americans from consumer fraud and discriminatory lending.

After the U.S. mortgage market crashed in 2008 and millions of Americans lost their jobs, savings, retirements and homes, Congress in 2010 established the Consumer Financial Protection Bureau to become the country’s first financial regulatory agency with a goal to protect consumers. The agency has since returned more than $21 billion improperly taken from more than 205 million Americans, according to the Oregon Department of Justice.

Acting director Russell T. Vought has attempted to terminate the agency’s operations by firing hundreds of staff, denying states access to the agency’s resources and requesting $0 to fund the agency’s operations, according to the complaint. 

The coalition of states, led by Oregon Attorney General Dan Rayfield, is asking the court to prevent the Trump administration from requesting $0 in funds for its operations and to order it to request money from the Federal Reserve to fulfill its duties as required by the law. 

Rayfield filed the lawsuit Monday in U.S. District Court in Eugene. 

“This is the same agency that stopped Wells Fargo when they were taking advantage of consumers without their consent and opening millions of accounts without consent,” Rayfield told reporters at a virtual press conference Monday afternoon. “This is the same agency that stopped Navient from taking advantage of student loan borrowers. This is the same agency that protects people who have credit cards, payday lending and mortgages. This is the agency that’s looking out on behalf of all of us.”

The coalition argues defunding the agency will have devastating impacts on consumers and disrupt states’ consumer protection abilities, which rely on consumer complaints and data from the agency.

In 2024, the federal bureau received 3 million consumer complaints, of which 8,800 were from Oregonians. That year, companies provided more than $700,000 in direct relief to Oregon consumers after those consumers made complaints through the bureau’s portal. 

Colorado Attorney General Phil Weiser said the lawsuit is his 48th lawsuit against the Trump administration this term, a surge from the 11 lawsuits he was a part of during the two years he served as attorney general during Trump’s first term. 

“My standard hasn’t changed,” he said. “The behavior of this administration has changed. They’re lawless again and again. They’re bullying. They’re reckless. They’re dangerous.” 

The states involved in the lawsuit with Oregon include Arizona, California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, New York, North Carolina, Rhode Island, Vermont, Wisconsin and the District of Columbia.

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