Richard Cordray Recess Appointment Sparks More Bickering

Obama achieves goal by appointing consumer watchdog--but risks backlash in courts and in Congress

January 4, 2012 RSS Feed Print

President Obama announced Wednesday that he would make a recess appointment of former Ohio Attorney General Richard Cordray to be the director of the newly formed Consumer Financial Protection Bureau—delighting his supporters on the left, enraging his critics on the right, and possibly entangling the budding agency in litigation as it begins its role as a consumer watchdog.

Republicans immediately blasted the move, painting it as yet another power grab by the Obama administration, and hinting that legal challenges to Cordray's appointment may be in the future.

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"It's clear the president would rather trample our system of separation of powers than work with Republicans to move the country forward," House Speaker John Boehner said after the appointment was announced. "This action goes beyond the president's authority, and I expect the courts will find the appointment to be illegitimate."

Sen. Orrin Hatch, a vocal opponent of Cordray and the new agency, warned of what it means for the future. "By opening this door, the White House is saying it can appoint any person at any time to any position it chooses without the Senate," he wrote on Twitter.

While Democrats defend the move, the latest speculation in D.C. is how Republicans will retaliate—through court challenges, or by ramping up opposition to other Obama nominees, who have already had a tough time getting confirmed with Republicans holding 47 Senate votes.

The Obama administration also announced Wednesday it would make three appointments to the National Labor Relations Board, further angering the right.

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"The general sense here is that the Republicans are not going to lie down and roll over," says Sarah Binder, an expert at the left-leaning Brookings Institution who follows Senate procedure.

Alabama Republican Rep. Spencer Bachus, the chairman of the House Committee on Financial Services, predicted litigious gridlock. "President Obama has delegitimized the CFPB and has opened the agency up to legitimate legal challenges that will cripple it for years," he said in a statement on his website.

The Constitution grants the president powers to appoint vacancies while Congress is in recess—but right now, no one can seem to decide whether or not Congress is truly in recess. Using a tactic that Democrats developed during the Bush years, Republicans have insisted that Congress hold symbolic sessions every few days, which in theory prevents a recess from occurring. With this latest action, Obama is disregarding that precedent, and possibly setting a new one that could change how both sides view the recess process.

It could also mean that thew new agency, created by the Dodd-Frank financial reform bill but so far hobbled by the lack of a permanent director, could face new litigation as it tries to regulate banks and other financial institutions.

"The danger there is that it adds more uncertainty," says Susan Bloch, a law professor at Georgetown University. "If [the CFPB] issues regulations, or takes action, whoever doesn't like it will contest their legitimacy. It's just one more arrow in their quiver."

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Banks might challenge new regulations by questioning the legitimacy of Cordray, although no one knows how seriously the courts would take them. As with the court challenges to the Affordable Care Act's constitutionality, the current Supreme Court makeup can be a wildcard.

"One could try litigating about this," says Adam Levitin, a law professor at Georgetown University. "It doesn't strike me as an especially fruitful way to go. I wouldn't want to be the institution that would bring that suit. If you lose, you've just pissed off your regulator."