More than a year-and-a-half after President Obama signed into
law the Dodd-Frank Wall Street Reform and Consumer Protection
Act, which created the Consumer Financial Protection Bureau
("CFPB"), the CFPB finally has a "Director"
– although the Director is not who many thought and hoped
it would be (Elizabeth Warren), nor was the process of installing
the Director in office the process contemplated by the authors of
the Dodd-Frank Act, which says that "... the Director shall be
appointed by the President, by and with the advice and consent of
the Senate." (Sec. 1011(b)(2)).
By the time the inaugural Director of the CFPB was installed,
former Ohio Attorney General Richard Cordray was the nominee to
head the fledgling bureau rather than Harvard Law Professor
Elizabeth Warren, who is back in Massachusetts running for the
United States Senate seat currently held by Senator Scott Brown
(R-MA) who, ironically, was one of only three Republican senators
who voted to approve the Dodd-Frank Act that created the
CFPB. And the process followed was not through a vote in the
Senate reflecting "the advice and consent of the Senate"
provided for in the Dodd-Frank Act, but through the President
announcing that he was appointing Cordray as Director using the
authority that the United States Constitution (Article II, sec. 2,
clause 3) confers upon the President "... to fill up all
Vacancies that may happen during the Recess of the Senate, by
granting Commissions which shall expire at the End of their next
Session ..."
President Obama's action of invoking the Constitution's
recess appointment authority drew praise from some and condemnation
from others.
Rep. Barney Frank (D-MA), co-author of the Dodd-Frank Act, praised
the action, saying that "President Obama has responded in an
entirely appropriate way to [Congress'] refusing to consider a
nomination, not because of any flaws in the nominee, but because
they are frustrated that they are unable to repeal, or weaken, a
duly passed statute." House Financial Services Committee
Member Brad Miller (D-NC) shared Frank's view, saying that
"President Obama made the right decision to move forward with
this appointment. He's tried for well more than a year to
negotiate in good faith with Senate Republicans, but there's
been no good faith by Senate Republicans. Their abuse of
constitutional confirmation powers and Senate rules is
unprecedented."
Others have a different view. Speaker of the House John
Boehner (R-OH) declared that use of the recess appointment process
in this instance "... goes beyond the President's
authority, and I expect the courts will find the appointment to be
illegitimate" while Senator Orrin Hatch (R-UT) criticized the
President's action saying that "[b]y opening this door,
the White House is saying it can appoint any person at any time to
any position it chooses without the Senate." Chairman
Spencer Bachus (R-AL) of the House Financial Services Committee
stated that "President Obama has delegitimized the CFPB and
has opened the agency up to legitimate legal challenges that will
cripple it for years..."
The following facts are clear.
- July 21, 2010: President Obama signed
the Dodd-Frank Act into law, creating the CFPB.
- July 18, 2011: President Obama nominated Richard Cordray to be
the first Director of the CFPB and sent his nomination to the
Senate.
- September 6, 2011: The Senate Banking Committee held a
confirmation hearing on the Cordray nomination.
- October 6, 2011: The Senate Banking Committee voted to send Mr.
Cordray's nomination to the full Senate with a straight party
line vote 12-10.
- December 8, 2011: By a vote of 53 yeas, 45 nays and 1
"present" the Senate failed to muster the 60 votes
required to invoke cloture and close further debate on the Cordray
nomination.
- January 3, 2012: The Senate Convened the Second Session of
112th Congress.
- January 4, 2012: President Obama invokes his "recess appointment" authority to install Richard Cordray as Director of the CFPB.
Given the acrimony surrounding the Cordray appointment, the
common expectation is that the President's action will be
challenged in Court. Conceding the fact that the Constitution
confers upon the President recess appointment authority, below are
some of the issues that may be raised in upcoming legal challenges
to the exercise of that authority in the appointment of Richard
Cordray to be Director of the CFPB:
- Since the Senate had reconvened the day before the President
invoked his recess appointment authority was the Senate "in
recess" for purposes of making recess appointments?
- Since the CFPB Director position theoretically became
"vacant" when the President signed the Dodd-Frank Act
into law on July 21, 2010, and the Constitution gives the President
authority "... to fill up all Vacancies that may
happen during the Recess of the Senate... ," did the
Cordray appointment meet that Constitutional test?
- Since Sec. 1066(a) of the Dodd-Frank Act says that "...
The Secretary [of the Treasury] is authorized to perform the
functions of the Bureau under this subtitle until the Director of
the Bureau is confirmed by the Senate ..." [emphasis
added] does the inaugural Director need actual Senate confirmation
for the CFPB to exercise its function?
- Since the explanatory language in the "conference report" to the Dodd-Frank Act says that "[The CFPB] will be run by a Director who is Presidentially appointed and Senate confirmed" does that give an advantage to those who would like to "undo" the recess appointment?
If upheld, a recess appointment expires at the end of the Senate's "next session." Since the Senate convened the 2nd Session of the 112th Congress on January 3, 2012, the end of the Senate's "next session" would be end of the 1st Session of the 113th Congress which will occur following the November Presidential and Congressional elections. Accordingly, if the recess appointment survives challenge, Director Cordray could serve almost two years as a recess appointee – and longer if, in the interim, the Senate votes to confirm him for the full five-year term provided for in the Dodd-Frank Act.
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