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Mortgage Banking Update - December 4, 2025

December 4, 2025

December 4 – Read the newsletter below for the latest Mortgage Banking and Consumer Finance industry news, written by Ballard Spahr attorneys. In this issue, our lawyers discuss the 10th Circuit’s Colorado opt-out decision, the recent nomination to head the CFPB, FHFA’s announcement of 2026 conforming mortgage loan limits, and much more.

 

Webinar: The CFPB’s Funding Crisis—What It Means for the Future of Consumer Financial Protection

The Consumer Financial Protection Bureau (CFPB) is facing an unprecedented financial crisis—and the consequences could reshape the future of consumer financial protection. On December 10, 2025, Acting CFPB Director Russ Vought informed the U.S. District Court for the District of Columbia that the Bureau will run out of money by year-end unless Congress provides a direct appropriation. (Because of dwindling funds, it has recently been reported that the CFPB will be transferring to DOJ the representation of the CFPB in all lawsuits in which it is a party.)

This development comes amid ongoing litigation over an injunction issued by Judge Amy Berman Jackson, which currently restricts the CFPB from reducing its workforce or taking other steps toward winding down operations. Although a D.C. Circuit panel vacated that injunction, its mandate remains stayed pending a petition for rehearing en banc—leaving the injunction in place for now.

Complicating matters further, the Department of Justice’s Office of Legal Counsel has recently concluded that the CFPB cannot legally draw additional funds from the Federal Reserve while the Fed is operating at a loss, and that doing so would violate the Anti-Deficiency Act. The CFPB now intends to seek funding directly from Congress, though approval is far from assured.

With major rulemakings—including those under Sections 1033 and 1071, as well as a new ECOA proposal—hanging in the balance, the stakes for industry, regulators, and consumers could not be higher.

Join us on December 15, 2025, at 12:00 PM ET for a 90-minute webinar analyzing the legal, operational, and policy implications of the CFPB’s funding crisis.

Our expert panel will discuss:

  • The validity of the CFPB’s and OLC’s interpretations of the Dodd-Frank funding provisions
  • Whether the Bureau waived its funding-deficiency arguments through delay or inconsistent conduct
  • The status of CFPB actions taken while the Fed was operating at a loss
  • The impact on current and future rulemakings if funding lapses
  • Operational consequences for financial institutions and other regulators
  • Potential judicial or legislative solutions—including whether this crisis could push Congress to bring the CFPB under the normal appropriations process

This program is essential for financial institutions, in-house counsel, compliance officers, and policymakers seeking clarity in a rapidly evolving situation with far-reaching implications. Click the link below to register.

CLE Credit

Approved for 1.5 CLE credits in CA, NV, NY, and PA; 1.8 NJ. Uniform Certificates of Attendance will be provided.

Moderator: Alan S. Kaplinsky

Panelists: Alex J. Pollock, Hal S. Scott, Richard J. Andreano Jr., John L. Culhane Jr., and Joseph J. Schuster

Click here to register.

Consumer Financial Services Group

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Webinar: Understanding the 10th Circuit’s Colorado Opt-Out Decision

The 10th Circuit’s November 10 decision in National Association of Industrial Bankers v. Weiser marks the first appellate interpretation of a state’s opt-out authority under Section 525 of Depository Institutions Deregulation and Monetary Control Act (DIDMCA)—and it carries major implications for state banks and their fintech partners.

The court held that a loan is “made in” an opt-out state if either the lender or the borrower is located there, meaning Colorado’s usury limits apply to loans made to Colorado residents by out-of-state state banks. While national banks retain full rate-exportation authority, the ruling could significantly reshape lending models in states that consider opt-outs.

A strong dissent argued that the majority’s reading conflicts with the text and purpose of DIDMCA and threatens the interest rate parity Congress intended between national and state banks. A petition for rehearing en banc will be filed on December 9, and the existing injunction against enforcement of Colorado’s statute remains in place pending the 10th Circuit’s action.

Join Our Webinar

December 16, 2025 | 12:00–1:30 PM ET

Click here to register.

Our panel will discuss:

  1. Status and expected duration of the injunction
  2. Which lenders and loan programs are affected
  3. Prospects for en banc review and upcoming amicus activity
  4. How the ruling may influence credit availability, charter conversions, and bank–fintech partnerships
  5. The decision’s relationship to Cantero, Conti, and Kivett
  6. Developments in other opt-out jurisdictions

Moderator:

Alan S. Kaplinsky, founder, former chair, and now senior counsel of Consumer Financial Services Group at Ballard Spahr LLP

Panelists:

  • Richard Andreano, partner and chair of Mortgage Banking Group and member of Consumer Financial Services Group at Ballard Spahr LLP
  • John Culhane, partner in Consumer Financial Services Group at Ballard Spahr LLP
  • Andrew Kushner, Senior Policy Counselor, Center for Responsible Lending
  • Joseph Schuster, partner in Consumer Financial Services Group at Ballard Spahr LLP

CLE credit will be provided.

Consumer Financial Services Group

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Podcast Episode: Fair Lending Developments Under Trump 2.0—Part 2

This episode marks the second of a two-part series, with Part One having been released on November 13. In this installment, we continue our conversation on the many changes in fair lending policy and enforcement under the second Trump administration.

The discussion is moderated by Alan Kaplinsky, senior counsel, founder, and former chair for 25 years of Ballard Spahr’s Consumer Financial Services Group, and features these distinguished experts in the field:

  1. Bradley Blower, Founder of Inclusive Partners LLC.
  2. John Culhane, Jr., senior partner and charter member of Ballard Spahr’s Fair Lending Team.
  3. Richard Andreano, Jr., practice group leader for Ballard Spahr’s Mortgage Banking Group and the head of Ballard Spahr’s Fair Lending Team.

In this episode our expert panel unpacks the fast-changing landscape of fair lending in consumer finance. With candid discussion from leading attorneys and industry insiders, we cover how federal policy swings, especially between recent administrations, have left lenders and businesses searching for direction on compliance, risk management, and best practices.

Hear insights on the evolving standards for disparate impact claims, the high stakes of Supreme Court challenges, and how regulatory shifts are changing the rules of the road for everyone. Learn why the future of lending is increasingly tied to artificial intelligence, what it means for fairness and oversight, and why receiving clear guidance is more vital than ever.

Our hosts tackle the challenges posed by executive orders on ‘de-banking’ and fair access, ongoing delays and debates surrounding the small business lending data rule, and the persistent struggle to address appraisal bias. Find out how states are stepping up where federal agencies may leave gaps and get practical advice for keeping your compliance management systems strong in uncertain times, particularly in view of how a future Presidential administration may seek to reverse Trump administration initiatives.

We encourage listeners to subscribe to the podcast on their preferred platform for weekly insights into developments in the consumer finance industry.

To listen to this episode, click here.

Consumer Financial Services Group

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Podcast Episode: Opportunities in the Solar Finance Industries Despite Trump 2.0

Step into the intersection of consumer finance law and the solar energy industry with host Alan Kaplinsky, senior counsel at Ballard Spahr, and special guest Steven Burt, attorney and former public policy leader at major residential solar companies.

In this episode, listeners will get an insider’s look at today’s solar landscape. Discover the key market segments, from utility-scale projects to commercial installations, community solar, and residential rooftop systems. Explore how recent shifts in federal policy under the Trump administration have changed energy priorities, from cancelling critical programs and phasing out residential solar tax credits, to redirecting support toward fossil fuels.

Learn why understanding new requirements around foreign entities of concern (FEOC) is now urgent for companies relying on global supply chains. Benefit from practical legal insights covering consumer financial services law, such as FICO checks, leasing regulations, and credit disclosures, and see how these shape the way solar powers American homes.

Despite evolving policy headwinds, the outlook for solar remains strong. Hear expert perspectives on state-level hotspots like California and Texas, emerging trends such as net metering reforms and battery storage, and the growing role of “virtual power plant” models that are reshaping residential solar’s future.

Consumer Finance Monitor is hosted by Alan Kaplinsky, senior counsel at Ballard Spahr, and the founder and former chair of the firm’s Consumer Financial Services Group. We encourage listeners to subscribe to the podcast on their preferred platform for weekly insights into developments in the consumer finance industry.

To listen to this episode, click here.

Consumer Financial Services Group

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CFPB Wants to Eliminate Disparate-Impact Claims Under ECOA

The CFPB has issued a proposed rule that would make substantial changes to Regulation B under the Equal Credit Opportunity Act (ECOA). In one of the most significant changes, the Bureau has preliminary determined that disparate-impact claims are not authorized by ECOA. The proposal also addresses what constitutes prohibited discouragement of applicants or prospective applicants and would substantially revise the rules governing special purpose credit programs (SPCPs) offered by for-profit creditors, essentially eliminating many of such SPCPs. The comment period is short, as comments are due December 15, 2025.

Disparate-Impact. The CFPB noted that the U.S. Supreme Court has not determined whether a disparate-impact claim is permitted under ECOA and added that “[t]he text of ECOA does not state that disparate-impact claims are cognizable under ECOA, nor does it contain effects-based language of the type that has been found in other statutes to invoke disparate-impact liability.” (Disparate impact also is referred to as the “effects test.”)

The CFPB proposes to delete language indicating that disparate-impact liability may be applicable under ECOA and to include a provision affirmatively stating that ECOA “does not provide that the “effects test” applies for determining whether there is discrimination in violation of the Act.”

The proposal would add the following language to the Regulation B commentary: “The Act does not provide for the prohibition of practices that are facially neutral as to prohibited bases, except to the extent that facially neutral criteria function as proxies for protected characteristics designed or applied with the intention of advantaging or disadvantaging individuals based on protected characteristics.” The CFPB does not propose to provide guidance on what would constitute a proxy for a protected characteristic.

Discouragement. The CFPB proposes to revise the provisions in Regulation B regarding the prohibition on discouraging applicants or prospective applicants on a prohibited basis to clarify and limit what constitutes discouragement. The main discouragement provision in the current Regulation B provides that “[a] creditor shall not make any oral or written statement, in advertising or otherwise, to applicants or prospective applicants that would discourage on a prohibited basis a reasonable person from making or pursuing an application.” The CFPB proposes to revise the provision to read as follows:

“A creditor shall not make any oral or written statement, in advertising or otherwise, directed at applicants or prospective applicants that the creditor knows or should know would cause a reasonable person to believe that the creditor would deny, or would grant on less favorable terms, a credit application by the applicant or prospective applicant because of the applicant or prospective applicant’s prohibited basis characteristic(s). For purposes of this paragraph (b), oral or written statements are spoken or written words, or visual images such as symbols, photographs, or videos.”

The CFPB also proposes to revise the Regulation B commentary to delete the following example of prohibited discouragement: “The use of words, symbols, models, or other forms of communication in advertising that express, imply, or suggest a discriminatory preference or a policy of exclusion in violation of the Act.” The proposal would add the following example of prohibited discouragement: “Statements directed at the general public that express a discriminatory preference or a policy of exclusion against consumers based on one or more prohibited basis characteristics in violation of the Act.”

The Commentary also would be revised to provide that “encouraging statements directed at one group of consumers cannot discourage other consumers who were not the intended recipients of the statements” and to add the following examples of statements that are not prohibited discouragement:

  • Statements directed at one group of consumers, encouraging that group of consumers to apply for credit.
  • Statements in support of local law enforcement.
  • Statements recommending that, before buying a home in a particular neighborhood, consumers investigate, for example, the neighborhood’s schools, its proximity to grocery stores, and its crime statistics.
  • Statements encouraging consumers to seek out resources to develop their financial literacy.

Addressing the discouragement prohibition in the preamble, the CFPB states that it “is concerned that the overbroad coverage of the regulation and its potential interpretations may constrain free speech and commercial activity in ways that are unwarranted.” This appears to stem from the view of the CFPB under current leadership that the CFPB case against Townstone Financial was improper in part because it targeted the company for protected political statements made by company representatives in a radio show and podcast.

When the CFPB indicated in its Spring 2025 regulatory agenda that it intended to assess whether rulemaking or other actions regarding Regulation B would facilitate compliance with ECOA by clarifying the obligations imposed by the statute, there was speculation by some that the CFPB might propose removing the prospective applicant references from Regulation B, given that ECOA focuses on only applicants. The proposals regarding discouragement reflect a narrower approach.

Special Purpose Credit Programs. The SPCP provisions of ECOA are as follows:

“It is not a violation of this section for a creditor to refuse to extend credit offered pursuant to-

(1) any credit assistance program expressly authorized by law for an economically disadvantaged class of persons;

(2) any credit assistance program administered by a nonprofit organization for its members or an economically disadvantaged class of persons; or

(3) any special purpose credit program offered by a profit-making organization to meet special social needs which meets standards prescribed in regulations by the Bureau;

if such refusal is required by or made pursuant to such program.”

The CFPB proposal is focused on SPCPs offered by for-profit entities. As reflected in the ECOA SPCP provisions, the CFPB has more authority to regulate such SPCPs.

Significantly, the proposal would prohibit such SPCPs from using the race, color, national origin, or sex, or any combination thereof, of the applicant, as a common characteristic or factor in determining eligibility for the program. The proposal would allow the use of religion, marital status, age or the receipt of public assistance income, or any combination thereof, in such a SPCP, but only if the for-profit organization provides evidence for each participant who receives credit through the program that in the absence of the program the participant would not receive such credit as a result of those specific characteristics. The corresponding provision in the current Regulation B is less stringent, as it provides that a SPCP offered by a for-profit entity must be “established and administered to extend credit to a class of persons who, under the organization’s customary standards of creditworthiness, probably would not receive such credit or would receive it on less favorable terms than are ordinarily available to other applicants applying to the organization for a similar type and amount of credit.”

Supporters of SPCPs likely will be concerned about the following statement by the CFPB in the preamble:

“While the Bureau declines in this proposal to reach a conclusion about whether ECOA’s SPCP provision permitting discrimination in favor of groups with special social needs—typically minority groups—is unconstitutional, the Bureau is mindful of recent Supreme Court decisions highlighting the legal infirmity under the Fifth and Fourteenth Amendments of laws that enable such discrimination.61 The constitutional guarantee of equal protection generally prohibits the government from discriminatory treatment on the bases of race, color, national origin, or sex; where those categories are implicated, it requires a thorough examination of the purported need for such discrimination and whether it is appropriately limited. Consistent with that precedent and the purposes of ECOA, and pursuant to its authority provided by 15 U.S.C. 1691(c)(3) to set standards for SPCPs offered or participated in by for-profit organizations to meet special social needs, the Bureau has reexamined the provisions of Regulation B that allow such SPCPs to use a prohibited basis—including but not limited to race, color, national origin, or sex—as common characteristics.

61 See, e.g., Students for Fair Admissions, Inc. v. President & Fellows of Harvard Coll., 600 U.S. 181 (2023). Cf. Ames v. Ohio Dep’t of Youth Servs., 605 U.S. 303 (2025) (affirming that there is no exception to civil rights laws (e.g., Title VII) that allows for discrimination against majority groups). See also Nuziard v. Minority Bus. Dev. Agency, 721 F. Supp. 3d 431, 465 (N.D. Tex. 2024), appeal dismissed, No. 24-10603, 2024 WL 5279784 (5th Cir. July 22, 2024); Strickland v. United States Dep’t of Agric., 736 F. Supp. 3d 469, 480 (N.D. Tex. 2024).”

You can read an analysis of the Students for Fair Admissions case by our Labor and Employment Group here.

If the proposals are finalized, they almost certainly will be challenged in court, and perhaps that is what the CFPB would like to happen so that the issues addressed by the proposals eventually are reviewed by the Supreme Court.

The Ballard Spahr Consumer Financial Services group will be recording a podcast on the proposals to be released in the future.

Richard J. Andreano, Jr. and John L. Culhane, Jr.

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President Trump Nominates Stuart Levenbach to Head CFPB

President Trump has nominated Stuart Levenbach, an Associate Director of the Office of Management and Budget, as CFPB director.

At OMB, Levenbach handles natural resources, energy, science, and water issues. During President Trump’s first term, Levenbach was chief of staff of the National Oceanic and Atmospheric Administration.

Levenbach does not have a background in consumer finance and multiple news organizations have reported that Trump administration officials have said that the nomination was a technical move. It allows Russell Vought to stay as Acting Director of the Bureau.

Under the Federal Vacancies Reform Act, Vought could only serve as Acting Director for 210 days from May 12, 2025, the date that Russell McKernan’s nomination was officially withdrawn. His term was set to expire next month. However, according to the Government Accountability Office, under the Act, once a person is nominated to fill the position, the acting director may serve while the nomination is pending in the Senate. Should that nomination be rejected, returned, or withdrawn, the acting director may continue to serve for an additional 210 days from the date of the rejection, return, or withdrawal.

Vought has said he expects the CFPB to fold in the next two or three months. Most recently, the Trump administration has told a federal court that the Bureau is running out of money, will run out of money in early 2026, and has no way to replenish its coffers. Under Section 1017 of Dodd-Frank, the CFPB is funded from the “combined earnings” of the Federal Reserve System. In the past, the Bureau has requested funds for the agency and the Fed has provided those funds. However, in a November 7 opinion interpreting Section 1017, the DOJ Office of Legal Counsel concluded that since the Federal Reserve System has no combined earnings, no funds are available for the Bureau.

Sen. Elizabeth Warren, (D-Mass.), attacked Levenbach’s nomination.

“Donald Trump’s sending the Senate a new nominee to lead the CFPB looks like nothing more than a front for Russ Vought to stay on as Acting Director indefinitely as he tries to illegally close down the agency,” she said. “Instead of doing everything in their power to lower costs for Americans, Trump and Vought want to make it easier for giant corporations to scam families out of their money.”

Consumer Bankers Association President and CEO Lindsey Johnson congratulated Levenbach.

“Congratulations to Stuart Levenbach for his nomination to serve as Director of the Consumer Financial Protection Bureau, which comes at a critical time for consumers and the financial services marketplace,” Johnson said.

Consumer Financial Services Group

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Anticipating Shutdown, CFPB Is Transferring Cases to DOJ

The CFPB is transferring all of its pending litigation to the Justice Department as a result of the funding crisis the Trump administration has said the Bureau faces, several news organizations have reported.

In addition, at a meeting on Thursday, Michael Salemi, the CFPB’s acting director of enforcement, said that more than 100 people will be furloughed because the CFPB is running out of money, The American Banker reported.

On December 10, 2025, Acting CFPB Director Russ Vought informed the U.S. District Court for the District of Columbia that the Bureau will run out of money by early 2026 unless Congress provides a direct appropriation.

The Department of Justice’s Office of Legal Counsel has recently concluded that the CFPB cannot legally draw additional funds from the Federal Reserve while the Fed is operating at a loss, and that doing so would violate the law.

The administration already has attempted to lay off more than 1,400 agency employees. The National Treasury Employees Union sued the administration, contending that the administration’s plan to lay off those employees amounted to an abolishment of the agency, something only Congress could do.

A divided three-judge panel of the D.C. Circuit had dissolved a lower court injunction blocking the firings, which it said the Trump administration could resume. However, when it dissolved the injunction, the panel withheld the mandate in the case to give the plaintiffs the opportunity to file a petition for a rehearing en banc. The plaintiffs subsequently did so.

During the Thursday meeting, CFPB staff members were told that in the coming weeks, both enforcement and other cases at the CFPB will be taken over by the DOJ, Law360 reported. That would include several lawsuits challenging agency rules, the news organization added.

CFPB officials also are developing a plan for mortgage lenders to work out the Average Prime Offer Rate, or APOR, if the agency shuts down, according to The American Banker. The Bureau normally calculates and publishes those rates, which change weekly, vary by loan type, provide a benchmark and stability for mortgage lending, and are used to determine compliance with Ability-to-Repay rules.

Senate Banking, Housing, and Urban Affairs ranking Democrat Elizabeth Warren, (D-Mass.), sharply criticized the CFPB’s decision to move the cases to the DOJ.

“Donald Trump and Russ Vought are racing to shut down the CFPB while their lawyers tell the courts the opposite,” she said. “In its latest move, the administration is transferring away all of the CFPB’s active litigation, critical work that the CFPB does to return billions of dollars directly to Americans cheated by big banks and giant corporations. Nobody is fooled about the Trump-Vought end game, and the courts must uphold the law.”

Daniel JT McKenna, Alan S. Kaplinsky, Richard J. Andreano, Jr., and John L. Culhane, Jr.

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Union Says Administration’s Failure to Seek Funding for CFPB Would Violate Injunction

On December 15, at noon, we will be producing a webinar titled, “The CFPB’s Funding Crisis: Legal, Operational, and Policy Implications.” Click here for a registration link.

Contending that the CFPB is relying on a “novel” definition of “combined earnings,” the union representing CFPB employees is asking a federal court to rule that the Trump administration is planning to violate an injunction barring the administration from shutting down the bureau.

“Under Section 1017 of Dodd-Frank, the CFPB is funded from the ‘combined earnings’ of the Federal Reserve System,” the National Treasury Employees Union stated in a motion to clarify an injunction issued by the U.S. District Court for the District of Columbia that, among other things, bars the firing of CFPB employees. “In the past, the Bureau has requested funds for the agency and the Fed has provided those funds. However, in a November 7 opinion interpreting Section 1017, the DOJ Office of Legal Counsel concluded that since the Federal Reserve System is losing money because of the current interest rate environment, it has no combined earning; therefore, no funds are available for the bureau.”

“The court should clarify that the defendants may not justify violating the injunction by choosing not to request funding from the Fed,” the union added.

We and others have made the point on many occasions in our blog (see here, here, here, and here) that the CFPB could not lawfully be funded after September 2022, as the Federal Reserve System has no combined earnings (which means profits under accounting principles and plain meaning) after that date, and has been running a deficit for quite some time. (Indeed, we believe that the CFPB under former Director Rohit Chopra requested and received from the Fed several unlawful payments totaling $1.9 billion beginning in the Fourth Quarter of 2022 and in 2023, 2024, and 2025.) The plaintiffs contend that “combined earnings” refers to revenue and not net profit.

Much earlier this year, and for reasons having nothing to do with lack of funding or a refusal by Vought to request additional funding from the Fed because of his belief that it would be unlawful to do so, the NTEU sued the administration, contending that the administration’s plan to lay off 1,400 employees and take certain other actions amounted to an abolishment of the agency, something only Congress could do.

A divided three-judge panel of the D.C. Circuit had dissolved a lower court injunction blocking the firings, which it said the Trump administration could resume. However, when it dissolved the injunction, the panel withheld the mandate in the case to give the plaintiffs the opportunity to file a petition for a rehearing en banc. The plaintiffs subsequently did so. The D.C. Circuit has not yet acted on the petition for rehearing en banc.

The Bureau “anticipates exhausting its currently available funds in early 2026,” the Justice Department told the district court.

The union contended that that notice is based on a “novel interpretation of Dodd-Frank that neither the CFPB, the Federal Reserve, nor any court has ever adopted.”

The union said that, “[t]he plain meaning of the Dodd-Frank Act’s text, its structure, and (until OLC’s memo) the understanding of every government entity to have considered the issue all confirm that ‘combined earnings’ means the total amount the Fed earns, not the total amount it earns minus some expenses but not others.”

It continued, “Because these earnings well exceed the amount needed to fund the CFPB, it follows that the Bureau can draw enough funds to comply with the court’s injunction; all it needs to do is request from the Fed the funds to which it is entitled—funds that the Fed has already determined it would be obligated to provide. The defendants’ novel contrary interpretation depends on a definition of ‘earnings’—as the total amount earned minus only interest expenses—that has no precedent, would decimate Congress’s attempt to secure an independent source of funding for the Bureau, and is unworkable in practice.”

The DOJ does not cite any sources that define earnings as total money earned minus interest expenses, according to the union. That, the union added, is enough to reject the Trump Administration’s interpretation of combined earnings.

“The defendants should not be permitted to shut down an agency based on a novel interpretation of the Dodd-Frank Act that even the Office of Legal Counsel could not find a single authority to support,” the union said.

On November 24, the district court ordered the parties to submit filings by November 26 identifying the provisions of the preliminary injunction that they believe remain in force and addressing the district court’s authority, given the D.C. Circuit’s opinion and the pending petition for a hearing en banc.

A federal district court generally retains limited jurisdiction to clarify (but, not modify in any substantive way) a preliminary injunction while an appeal of that injunction is pending, so long as the clarification does not materially alter the injunction or disturb the issues before the Court of Appeals.

While the CFPB may not lawfully be able to request funds from the Fed this quarter, Bill Nelson, Executive Vice President, Chief Economist, and Head of Research of the Bank Policy Institute posted the following message on November 26 on his LinkedIn page:

“Forward guidance:

Subject: Forward guidance: After losing $240 billion, the Fed is once again profitable

Here is something to be thankful for this Thanksgiving: The Federal Reserve System has returned to profitability. It appears to be on track for the combined profits of the 12 Reserve Banks to be over $2 billion in the current quarter. Warning: I had to piece this together from imperfect sources, so it’s not exact, but it should be about right.

Returning to Fed profits, the Fed began losing money in September 2022 when the interest it pays commercial banks, thrifts, and credit unions on reserve balances plus the interest it pays money market mutual funds and foreign official institutions on reverse repurchase agreements rose above the sum of its operating expenses and the interest it earns on its portfolio of securities. It lost about $240 billion to date. These are real losses borne by taxpayers.

Rather than record negative equity, however, the Fed began booking what it calls the “deferred asset” but inside the Fed we used to call the “magic asset.” The deferred asset equals both the cumulative losses the Fed has made and the future profits the Fed plans on retaining rather than remitting to Treasury until it fills up the hole in its balance sheet created by its losses. What I didn’t realize until recently is that each Reserve Bank records its own deferred asset equal to its own individual cumulative losses and repaid with its own individual profits.

The second half of table 6 on the Fed’s statistical release H.4.1 reports the Reserve Banks’ deferred assets. They are reported as a negative liability “earnings remittances due to Treasury.” Note that the Atlanta Fed appears to have never had a deferred asset and the St. Louis Fed never had a very large one. Atlanta is funded to a greater extent by currency than the other Reserve Banks (thank you Miami branch) which makes it extra profitable. Consequently, those two Reserve Banks are remitting their profits to Treasury. You can see the remittances in the Treasury’s daily statement as a deposit from the Federal Reserve System each Wednesday.

In addition, returning to table 6, the Fed’s total deferred asset has increased over the past two weeks (earnings remittances due has become less negative). That indicates that the other 10 Banks are making profits in aggregate and so paying down the total deferred asset. Each of the 10 Reserve Banks except Dallas appears to have been made money over the past two week, so the combined profits of those 10 Banks has been positive.

Moreover, the Federal Reserve System has been profitable so far this quarter. Through this past Wednesday, the Fed has remitted $884 million to Treasury. These are the profits made by the Atlanta and St. Louis Feds, the two Reserve Banks that do not have a deferred asset. The other 10 banks have lost money in aggregate for the quarter to date despite having made money over the past two weeks. The total deferred asset on table 6 of the H.4.1 has decreased (become more negative) in the fourth quarter by $483 million. Consequently, so far in the fourth quarter, the Fed in total has had combined profits of approximately $401 million.

There are six more weeks in the quarter. If Atlanta and St. Louis continue to have profits of about $110 million per week, and the deferred asset continues to increase (become less negative) as it has done over the past two weeks, by $203 million per week, then the Fed will have profits for the remainder of the quarter of $1.9 billion. If so, the Fed’s profits for the entire quarter will be $2.3 billion.

If the Fed has turned the corner in terms of total combined profitability, profits will be considerably higher in the first quarter of next year, boosted further if the Board cuts the IORB rate again.”

“Bill”

However, there is another school of thought that maintains that the Fed will not have sufficient “combined earnings” under Dodd-Frank until it eliminates past accumulated losses. According to this school of thought, Congress could not have intended that the CFPB could get funding while the Fed as a whole has negative capital as reflected in the deferred assets on the balance sheet on 10 of the 12 Federal Reserve Banks. While two Federal Reserve Banks do not have deferred assets, Dodd-Frank contemplates looking at the Fed on combined basis.

Since September 2022, several Federal Reserve Banks have been losing money. Instead of showing negative capital the way a private bank would, the Fed records those losses as “deferred assets.”

A deferred asset is basically an IOU the Fed writes to itself. It tracks how much future profit the Fed must earn before it can resume sending surplus earnings to the U.S. Treasury. It’s not something the Fed can sell or use—just a bookkeeping tool that reflects its unique ability to operate even while running losses.

Thus, under this school of thought, the Fed may not lawfully send funds to the CFPB until it has recouped all of its accumulated losses by wiping out its deferred assets. Put differently, the Fed may only pay the CFPB out of funds that would otherwise have been remitted to the Treasury and any new profits of an individual reserve bank must not be remitted to the Treasury while there is still a deferred asset on its books.

The federal district court will need to resolve this issue if it concludes that “combined earnings” means profits and not revenues.

Alan S. Kaplinsky

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ACA Files Suit Challenging Colorado Law That Omits Medical Debts From Credit Reports

The trade group representing debt collection agencies, creditors, debt buyers, collection attorneys, and debt collection industry service providers has filed suit challenging the Colorado law that bans the inclusion of medical debts in credit reports.

ACA International is joined by one of its members, the Fresno Credit Bureau, in the suit against Martha Fulford, the Colorado Uniform Consumer Credit Code Administrator. The suit was filed in the U.S. District Court for the District of Colorado.

They assert that the Fair Credit Reporting Act (FCRA) specifically allows the inclusion of medical debts as long as they are coded to protect the privacy of patients. They said that Congressional choice reflected a “deliberate balance” that allows for the protection of sensitive health details while preserving the integrity and completeness of credit reports.

The Colorado law, known as HB 23‑1126, “does exactly what Congress sought to prevent: it imposes a state-specific prohibition on reporting medical debt, even when federal law expressly permits such reporting under defined conditions,” ACA and the Fresno Credit Bureau argue.

“HB 23‑1126 creates precisely the patchwork Congress sought to avoid, confirming that it is preempted under the FCRA,” according to ACA and the Fresno Credit Bureau.

“HB 23‑1126 is conflict preempted because it prohibits conduct that federal law expressly [allows],” the plaintiffs allege.

In enacting the law, the legislature overlooked unintended consequences that result from the suppression of truthful information about unpaid medical bills and that harm providers and patients, according to the plaintiffs.

“This type of content-based prohibition not only violates the intent of the FCRA—which aims to create a nationwide, uniform system for sharing accurate credit information—but also imposes an undue restriction on [accurate commercial] speech [in violation of the First Amendment],” ACA and the credit bureau allege.

They said that transparency regarding unpaid medical bills helps creditors’ ability to accurately assess a person’s ability to take on more debt.

The legislation also causes a downgrade for borrowers in Colorado, they assert, saying that lenders cannot assess which Coloradans have unpaid medical debts.

They said that the law is the “top of a slippery slope of states banning reporting of certain categories of debt which sound good to voters. Why not ban reporting of a person’s credit card payment? Food purchased at the grocery store is just as essential as health care.”

The plaintiffs seek a declaration that federal law preempts the state law and an order enjoining the defendant from enforcing it.

The lawsuit was filed shortly after the CFPB issued an interpretive rule saying that the FCRA preempts states from regulating the contents of credit reports, calling out specifically state laws that purport to limit the reporting of medical debt information.

Consumer Financial Services Group

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FHFA Announces 2026 Conforming Mortgage Loan Limits

The Federal Housing Finance Agency (FHFA) recently announced the conforming loan limits for residential mortgage loans acquired by Fannie Mae and Freddie Mac in 2026. Fannie Mae addresses the limits in Lender Letter 2025-04.

The standard loan limit for a one-unit home increased from $806,500 in 2025 to $832,750 for 2026. For high-cost areas, the loan limit for a one-unit home increased from $1,209,750 for 2025 to $1,249,125 for 2026. That amount also is the 2026 baseline loan limit for Alaska, Guam, Hawaii, and the U.S. Virgin Islands.

The FHFA announcement that is linked above includes links to:

  • A list of conforming loan limits for all counties and county-equivalent areas in the U.S.
  • A map showing the conforming loan limits across the U.S.
  • A detailed addendum of the methodology used to determine the conforming loan limits.
  • A list of FAQs that covers broader topics that may be related to conforming loan limits.

Fannie Mae advises that the loan limits apply to the original loan balance, and not the loan balance at the time of delivery.

Richard J. Andreano, Jr.

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Hurry Up and Bargain: Faster Labor Contracts Act Introduced in the House With Some Republican Support

Originally introduced in the Senate in March 2025, Representative Donald Norcross (D-NJ) introduced the Faster Labor Contracts Act (FLCA) to the House of Representatives on September 16, 2025. The FLCA seeks to hasten the bargaining of first collective bargaining agreements. According to the proposed bill, average number of days for bargaining a first contract were well over a year — 465 days. The FLCA is identical to the first contract mediation and arbitration provision of the Protecting the Right to Organize ACT (PRO Act). However, importantly, where the PRO Act had no Republican support in the Senate and limited support in the House, the FLCA has two Republican sponsors in the Senate and 12 in the House.

Current Status of Bargaining. Currently, although employers and unions have a duty to bargain in good faith under the National Labor Relations Act, there are no established bargaining timeframes or mandatory mediation or arbitration for bargaining private industry contracts. Employers and unions can, and have, bargained for literal years to reach agreement; others never reach agreement despite employees having properly elected to form or join a union.

What does the FLCA Do? The FLCA seeks to mandate time limits for bargaining stages.

  • First, the employer must hold a first bargaining session within 10 days after receiving a written request for bargaining from a bargaining representative.
  • Second, either party may request mediation from the Federal Mediation and Conciliation Service (FMCS) after 90 days of bargaining.
  • Lastly, 30 days after the request for mediation, FMCS must refer the dispute to a three-person arbitration panel with one member determined by each party and a third by mutual agreement (or by FMCS if agreement cannot be reached). A majority decision of the arbitration panel then renders a decision binding the parties to arbitrator-determined terms and conditions of employment for a period of two years.

*The parties can extend any of the established time periods or modify the arbitration-determined contract by mutual agreement.

A Sign of Bipartisan Support of Unions and Workers? Some Early Hope for a Bipartisan Bill? Like the PRO Act, the Democratic party and many unions, including the Teamsters and the AFL-CIO, have strongly supported the proposed legislation while Republican politicians and business organizations have largely opposed the bill. However, some Republicans — notably Senator Hawley—have supported the FLCA. Unlike the PRO Act, the FLCA can claim some bipartisan momentum. Senator Hawley’s cosponsoring of the bill is especially notable as a Republican who is usually aligned with business interests against organized labor. Indeed, Senator Hawley has made statements relaying his pro-worker stance on this matter: “[W]orkers are often prevented from enjoying the benefits of the union they voted to form when mega-corporations drag their feet, slow-walk contract negotiations, and try to erode support for the union. It’s wrong. We need real labor reform that puts workers first. I’m proud to introduce bipartisan and Teamsters-endorsed legislation that does just that.”

Both the Senate bill and its House companion are currently in committee for review. Passage of the law would fundamentally alter labor-management negotiations, so stay tuned for updates.

Ballard Spahr’s Labor and Employment Group continues to advise employers on labor, employment, and policy issues. We will keep monitoring developments under the new administration and their impact on employers. Please contact us if we can assist you with these matters.

Ethan Picone, Shirley S. Lou-Magnuson, and Brian D. Pedrow

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Make-Whole or Make-Believe: NLRB ‘Foreseeable’ Damages Creates Circuit Split

Circuit Split Over Thryv Remedies. On October 20, 2025, the U.S. Court of Appeals for the Ninth Circuit generally upheld expanded make-whole remedies contemplated by the National Labor Relations Board (the Board) in Thryv, Inc., 372 NLRB No. 22 (2022). But, since Halloween this year, both the Fifth and the Sixth Circuits joined the Third Circuit in rejecting Thryv remedies. The Board’s expansion of remedies through Thryv—seen by many as practically unbounded and an unlawful exercise of regulatory authority—has added entirely novel remedies to unfair labor practice litigation.

Thryv Introduces New, “Foreseeable” Labor Remedies in 2022. During the 87 years before Thryv, the Board awarded so-called “equitable” remedies in unfair labor practice cases based on its statutory authority in Section 10(c) of the National Labor Relations Act (the Act). Section 10(c) provides that the Board shall take “such affirmative action including reinstatement of employees with or without backpay, as will effectuate the policies of this Act.” Board remedies have gone beyond reinstatement and backpay over the years, but, until Thryv, monetary awards generally fell under the umbrella of backpay. Traditional remedies have included, among other things, payment of lost employment benefits, medical costs related to lost health care coverage and missed pension premiums.

The Arguments Against Thryv. Critics of Thryv argue that Section 10(c) limits the Board to award only equitable remedies—not legal remedies. Thus, the inclusion of remedies for “foreseeable pecuniary harms” is contrary to the language and purposes of the Act and arguably based in tort law. Notably, the Supreme Court has previously held that, while the Board has broad authority to craft remedies under Section 10(c), that mandate is also fundamentally limited: “Congress did not establish a general scheme authorizing the Board to award full compensatory damages for injuries caused by wrongful conduct.” UAW v. Russell, 356 U.S. 634, 643 (1958). However, in Thryv, the Board’s novel, make-whole remedy arguably provided “consequential” or “compensatory” damages by including “all direct foreseeable pecuniary harms,” which could apply to things such as credit card late fees, child care costs, and penalties for early withdrawals from retirement accounts. Litigants challenging the law have also argued that (a) the contemplated remedies violate the Seventh Amendment right to a jury trial, and (b) they are potentially unbounded, which could lead to uncertain, speculative, and extremely punitive damages calculations.

Rejection of Thryv Consequential Damages by Acting General Counsel of the NLRB and Three Circuit Courts of Appeal. Thryv remedies have proved controversial and have faced significant opposition. Shortly after the beginning of the second Trump administration earlier this year, the President Trump-appointed Acting NLRB General Counsel expressly disavowed Thryv non-equity remedies and instructed NLRB Regional Directors not to seek such remedies. See NLRB General Counsel Memorandum 25-06. And as noted above, the Third, Fifth, and Sixth Circuits rejected Thryv, concluding that these new remedies were consequential damages which exceeded the Board’s authority under the Act. See NLRB v. Starbucks Corp., 125 F.4th 78 (3d Cir. 2024); Hiran Mgmt., Inc. v. NLRB, — F.4th —, 2025 WL 3041862 (5th Cir. Oct. 31, 2025); NLRB v. Starbucks Corp., — F.4th —, 2025 WL 3089798 (6th Cir. Nov. 5, 2025).

Approval of Thryv Remedies by the Ninth Circuit. Alternatively, the Ninth Circuit generally upheld Thryv damages but reserved judgment on specific damages that it deemed too speculative: “[o]nly actual losses suffered on account of an unfair labor practice . . . should be made good. And, indeed, the Board must still establish, in a later proceeding, how any make-whole relief it seeks is equitable or sufficiently tailored to the actual, compensable injuries suffered by the employees in this case.” Int’l Union of Operating Eng’rs, Stationary Eng’rs, Local 39 v. NLRB, 127 F.4th 1023 (9th Cir. 2025) (internal quotation marks and citations omitted).

Current Status: Good Law but Dead Letter? While Thryv’s remedy expansion remains binding Board caselaw (for now), there will be significant uncertainty until either the Board revisits the issue or the U.S. Supreme Court rules on it. Meanwhile, employers facing unfair labor practices in other circuits that have not explicitly rejected Thryv already, including on the west coast in the Ninth Circuit, should be wary of enforcement of Thryv damages.

However, Thryv enforcement is uncertain because of dead letter Acting General Counsel Memorandum 25-06 and the current Board’s unwillingness to issue such remedies. Moreover, the Board still does not have a quorum of members and is currently unable to issue any precedential opinion overturning Thryv.

So far, no party has sought U.S. Supreme Court review of these cases, and it is unclear what the Board’s litigation strategy will be to support Thryv remedies when the Acting General Counsel just disavowed them. Stay tuned—we will continue to update as the situation progresses.

Ballard Spahr’s Labor and Employment Group continues to advise employers on labor, employment, and policy issues. We will keep monitoring developments under the new administration and their impact on employers. Please contact us if we can assist you with these matters.

Ethan Picone, Shirley S. Lou-Magnuson, Joseph Q. Ridgeway, and Brian D. Pedrow

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Supreme Court Denies Ousted Democratic NCUA Board Members’ Request for Expedited Consideration

The U.S. Supreme Court has denied a request to consider on an expedited basis a petition from two ousted Democratic NCUA board who are challenging their firings.

Todd Harper and Tanya Otsuka are challenging their firings even though the Federal Credit Union Act, unlike some federal laws governing other financial regulators, does not state that members of the agency board may only be removed for cause.

They had asked the Court to consider their case when the Court considers a case in which Rebecca Slaughter is challenging her firing by President Trump from the FTC. The Court has agreed to hear the FTC case, with oral arguments scheduled for December. However, the Court denied the fired NCUA members’ request for expedited consideration, although the Court could still decide to consider their case separately.

The two Democrats have stressed the urgency of their case because the firings left only one NCUA Board Member, Republican Chairman Kyle Hauptman. Nonetheless, the NCUA has advised that it can function appropriately with only a single board member.

After being notified that they had been fired, Harper and Otsuka sued in the District Court for the District of Columbia. The District Court found in their favor, issued a permanent injunction ordering their reinstatement, and declined to stay that order.

The Trump administration then sought an emergency stay and a stay pending appeal from the U.S. Court of Appeals for the District of Columbia and told the Court of Appeals that federal law did not provide the ousted NCUA board members with protection from firing.

A panel of three judges granted the administration’s request for an emergency stay, granted the request for a stay pending appeal, and then later issued an order holding the case in abeyance pending the decision of the Supreme Court in the Slaughter case.

Subsequently, Otsuka and Harper filed their petition for a writ of certiorari before judgment, asking the Supreme Court to consider their firings on an expedited basis.

Consumer Financial Services Group

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Looking Ahead

CaMBA – Legal Issues and Regulatory Compliance Conference
December 8-9, 2025 | Irvine Marriott Hotel, Irvine, CA
Employment Law Updates – How to Protect Yourself
December 9, 2025 – 10:00 AM PT
Speaker: Richard J. Andreano, Jr.

The CFPB’s Funding Crisis: Legal, Operational, and Policy Implications
A Ballard Spahr Webinar | December 15, 2025, 12 PM ET
Speakers: Alan S. Kaplinsky, Richard J. Andreano, Jr., John L. Culhane, Jr., and Joseph J. Schuster

The 10th Circuit’s Decision in National Association of Industrial Bankers v. Weiser: Understanding Colorado’s Opt-Out From Section 27 of the FDIA and Its Broader Implications
A Ballard Spahr Webinar | December 16, 2025, 12 PM ET
Speakers: Alan S. Kaplinsky, John L. Culhane, Jr., Burt M. Rublin, Joseph J. Schuster, and Ronald K. Vaske

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