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The Trump administration has launched its most direct attempt yet to shut down the top US consumer watchdog, arguing the current funding mechanism behind the Consumer Financial Protection Bureau (CFPB) is unlawful.

Attorneys for the administration claimed in a court filing that the agency “anticipates exhausting its currently available funds in early 2026”, setting the stage for it to be dismantled.

The CFPB is legally barred from seeking additional funds from the Federal Reserve, its typical source of funding, the attorneys suggested.

Donald Trump’s officials have tried persistently to close the agency, attempting to fire the vast majority of its workforce. These efforts sparked months of legal wrangling.

The CFPB has returned more than $21bn to US consumers since it was set up, in the wake of the financial crisis, to shore up oversight of consumer financial firms.

The justice department’s office of legal counsel issued an opinion claiming the CFPB cannot draw money from the Fed currently, claiming the “combined earnings of the Federal Reserve System” refers to profits of the Fed, which has operated at a loss since 2022.

Several federal judges have previously rejected that argument used by companies attempting to dismiss lawsuits brought by the agency, reported Politico.

Russell Vought, the White House office of management and budget director, said in October that he plans to shut down the agency, and that this would take up to three months.

The claim was criticized by Democrats, given previous contrary statements from the administration, and court decisions blocking the agency from being shut down.

“These comments are particularly concerning given that a federal court has specifically blocked you from illegally shutting down the agency,” wrote Senate banking committee Democrats in a letter to Vought. “Your continued attempts to shutter the CFPB are illegal, and American families stand to pay the price.”

Vought has already suspended most of the agency’s work, as the full DC circuit court of appeals is deciding whether to take the case as a lower court order blocked the firings of about 90% of the agency’s staff.

The CFPB did not immediately respond to a request for comment.