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President Installs Cordray As CFPB Director

Posted on 1/5/2012

As expected, President Obama yesterday appointed Richard Cordray to be Consumer Financial Protection Bureau (CFPB) Director, despite the fact that the Senate has not formally recessed. In a White House blog post, the Administration proclaimed the Senate to have "effectively been in recess for weeks" and called the Senate's actual pro forma sessions to be "gimmicks" that "do not override the President's constitutional authority to make appointments."

Senate Minority Leader Mitch McConnell (R-KY) said the appointment "represents a sharp departure from a long-standing precedent that has limited the President to recess appointments only when the Senate is in a recess of 10 days or longer. Breaking from this precedent lands this appointee in uncertain legal territory, threatens the confirmation process and fundamentally endangers the Congress's role in providing a check on the excesses of the executive branch."

"The controversial nature" of the appointment "reinforces the banking industry's concerns about the Bureau's structure and lack of accountability," ABA President and CEO Frank Keating said. "It puts the Bureau's future actions in constitutional jeopardy, threatening its work, complicating compliance efforts of banks, and further undermining the entity's authority and credibility… It's critical that Congress strengthen accountability at the CFPB by instituting a board or commission to address the Director's unchecked authority to make decisions that could limit financial choices available to consumers."

Gov. Keating also pointed out that the appointment alters the composition of the FDIC Board, potentially undermining its official acts at a time when key FDIC appointments are pending in the Senate.

The President followed his CFPB action with the appointment of three new members to the National Labor Relations Board, raising the question of whether more "recess" appointments are to come.

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