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President appoints Richard Cordray to run the Consumer Financial Protection Bureau

Fed up with Republican obstructionism in the U.S. Senate, President Obama plans to announce that he is appointing his nominee for Director of the Consumer Financial Protection Bureau to the post effective immediately. Richard Cordray, fifty-two, previously served as Ohio’s forty-ninth attorney general before he was nominated by the President last July to run the CFPB, which was created and staffed by Elizabeth Warren, now a candidate for U.S. Senate in Massachusetts.

Unfortunately, the Senate has not acted on Cordray’s nomination. It didn’t even reach the Senate floor until December, and it when it did, it was bottled up there by the threat of a filibuster. Republicans have made it plainly clear they won’t allow the nomination to come up for a vote, because they know that if they did, Cordray would be confirmed by a majority of the Senate. And they want the CPFB to remain directorless. They know that without a director, it can’t exercise much of its authority under the Dodd-Frank Wall Street Reform Act, a law that all Senate Republicans (with the exception of Scott Brown) voted against.

The White House knows this too, which is why the President is making a recess appointment. The administration has nothing to lose. The appointment at least gives the Bureau a permanent director through the presidential election, which means it can finally flex its muscles. If the President is reelected, he can renominate Cordray and put pressure on the Senate to confirm the nomination. If not, the expiration of the appointment in January of 2013 won’t matter.

The President is to formally announce the appointment at an event in Cleveland, Ohio (Cordray’s home state) in a few hours.

Reaction to the decision came swiftly.

Not surprisingly, Republicans aren’t pleased at all (John Boehner has already called the appointment “an unprecedented power grab”, ignoring the fact that he spoke out in support of recess appointments made by George W. Bush). But consumer protection advocates cheered the news.

Lisa Donner, executive director of Americans for Financial Reform. said the coalition (comprised of more than two hundred and fifty organizations) stood ready to help the Consumer Financial Protection Bureau begin fulfilling its mission.

“We commend the President for placing the interests of consumers and families first and rejecting the demands of the CFPB’s opponents, both on and off Capitol Hill, that the agency’s independence and power to protect consumers be gutted in return for allowing it to continue to exist. AFR will work together with the President, the CFPB and others who want to help rebuild confidence in our financial regulatory system,” she said in a statement.

Ed Mierzwinski, consumer program director for the federation of state PIRGs (public interest research groups) agreed. “We applaud President Obama for standing up to Wall Street and its backers on Capitol Hill on behalf of families, seniors, servicemembers, students and other consumers who need protection from unfair financial practices,” he said in a statement sent to NPI by WashPIRG.

Elizabeth Warren’s campaign quickly created a page where donors and volunteers could send messages of support to Cordray as he begins his new job.

Thanks to President Obama’s recess appointment, the Consumer Financial Protection Bureau gets its first director — and its full powers — with Richard Cordray.

For months, determined as ever to protect Wall Street and the big banks instead of you, Republicans stymied the agency from doing its job by filibustering Cordray’s nomination. But they cannot block this appointment.

Help celebrate the end of the Republican roadblock — and tell Richard Cordray we stand with him in this important fight for middle-class families.

The U.S. Constitution explicitly allows the President to make recess appointments, but it does not define what constitutes a recess. Many constitutional scholars would probably agree that Congress is in recess both between sessions and when it decides to go into an intrasession recess, but lately, Congress has not agreed to go into recess. Instead, the House and the Senate have been holding what are known as pro forma sessions, which consist of the banging of gavels and little else. (No business is transacted during a pro forma session, which might be more appropriately termed a phantom session).

The decision to appoint Cordray sets up a showdown with congressional Republicans about the legitimacy of pro forma sessions. The White House will probably argue that Congress is in a de facto recess and that President Obama is within his rights to make a recess appointment. They can point out that Congress has not actually met since the holidays began. Neither the House nor the Senate has achieved a quorum, and neither chamber has conducted any business.

The crux of the matter is whether having a lone representative or senator banging a gavel at a podium means that Congress is not in recess. That question might end up being litigated in court.

In the meantime, there’s little that Republicans can do about the appointment other than whine.

One Comment

  1. burton dorion
    Posted January 4th, 2012 at 10:29 AM | Permalink

    Cordray as a comsumer watchdog seems unappropriate in light of last weeks PD article about how last year, Cordroy’s office was in charge of making sure that companies that recieved ODOD (Ohio Department of Development) grants fullfilled the job creation part of their agreement and they failed miserably. His lack of watchdog skills cost Ohio Taxpayers tens of millions of dollars. See the article
    http://www.cleveland.com/open/index.ssf/2011/12/nearly_half_of_companies_that.html#comments

    It didn’t get much press so I imagine Obama’s staff didn’t see this or I can’t imagine they would have gone forward with Cordray. If you are not familiar with the article, here is how it related to Cordory and his watchdog ability.

    Last year, Cordory’s office was in charge of making sure companies who recieved ODOD rewards fulfilled the job creation requirements or else the state could clawback the money (taxpayer dollars) they received. Cordroy reported that 90% of companies fulfilled their end of the agreement. This year is came out that the number is only 52% and the reason it was so high in the previous year was that “Cordray’s analysis, however, was based on voluntary surveys that companies submitted to the attorney general’s office, according to a Lisa Hackley, a spokeswoman for DeWine. Only about 25 percent of the companies responded to the survey, Hackley said.”

    Was it that hard to slip one by our new watchdog and take tens of millions of taxpayer dollars they didn’t deserve? How does Mr. Cordray find out if the companies lived up to their end of the bargain…he sent them a voluntary survey and politely asked them if they created the jobs they promised they would and he didn’t audit the few responses he got. THIS IS A PERSON IN A WATCHDOG POSITION!!!

    My question is why he would even have to ask the company anything? To see if companies created the jobs they promised, he could simply look at the tax rolls to see the number of OHIO employees and total ohio payroll each company had.

    Do you think this is relavent to the conversation?