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.