White House Senior Advisor to President Obama, Valerie Jarrett, right, steps off Marine One with Richard Cordray, left, a few hours after being announced as the Director of the Consumer Financial Protection Board on Jan. 4. (Paul J. Richards / AFP via Getty Images)
President Obama defied GOP lawmakers on Wednesday when he bypassed Congress and invoked presidential recess appointment authority to install former Ohio attorney general Richard Cordray to head the newly created Consumer Financial Protection Bureau.
Republicans blasted the move by Obama as constitutionally dubious, arguing that the Senate was in "pro forma session" and technically not in recess. Meanwhile, business groups, such as the powerful U.S. Chamber of Commerce, expressed disappointment with the decision and said that Cordray's authority as the consumer watchdog could ultimately be challenged in the courts.
For his part, Obama charged Republicans with foot-dragging on Cordray's appointment of the agency tasked with oversight of non-bank financial companies.
The president announced his nomination last summer and pushed Republicans to give Cordray an up or down vote. Although Cordray had the support of both Republican and Democratic attorneys general across the country, Senate Republicans blocked a vote on the nomination, because of larger concerns about the lack of congressional oversight of the agency.
"When Congress refuses to act and as a result hurts our economy and puts people at risk, I have an obligation as president to do what I can without them," Obama said in a speech in Shaker Heights, Ohio. "I have an obligation to act on behalf of the American people."
The White House also announced that Obama made three recess appointments to fill vacant seats on the National Labor Relations Board. Senate Minority Leader Mitch McConnell noted Obama announced the nomination of two of the NLRB appointees — Sharon Block and Richard Griffin — two days before the Senate was scheduled to adjourn last month. The White House says Obama has made 28 recess appointments compared with 61 made by President George W. Bush at the same point in his first term, and the NLRB appointments were necessary for the board to reach quorum.
"What the president did today sets a terrible precedent that could allow any future president to completely cut the Senate out of the confirmation process, appointing his nominees immediately after sending their names up to Congress," said McConnell, who also questioned the legality of the appointments. "This was surely not what the framers had in mind when they required the president to seek the advice and consent of the Senate."
Sarah Binder, a governance expert at the Brookings Institution in Washington, said that the Constitution doesn't define what a recess is. She noted the courts found ambiguity on the issue when Sen. Ted Kennedy, D-Mass., unsuccessfully challenged President George W. Bush's 2004 recess appointment of William Pryor to the 11th Circuit Court of Appeals.
Ultimately, a challenge to Cordray's authority as director could come from an organization that finds itself in the CFPB's cross hairs, said Jess Sharp, executive director of the U.S. Chamber of Commerce's Center for Capital Markets.
"Chances are that someone is going to take the view that this was an improper appointment — and that this person doesn't have the full authority of the bureau because he came to the position as a recess appointment when the Senate wasn't in recess," Sharp said.
Obama had made installing Cordray a high priority because the agency, by law, lacks power without a chief. The law that established the CFPB gives the agency oversight authority over non-bank financial companies such as payday lenders, credit reporting agencies, mortgage companies and debt collectors. Much of that oversight power sits with the agency's director, however, rather than the agency itself.
The Ohio speech was billed as an address on the president's economic vision. Obama said the appointment was an important step toward strengthening oversight and "will bring us closer to an economy where everyone plays by the same rules."
Obama didn't address the legality of his decision, but White House communications director Dan Pfeiffer dismissed the GOP argument as "gimmickry."
Aamer Madhani reports for USA Today.