House Financial Services Committee Chairman Jeb Hensarling said some of the actions made by the head of the Consumer Financial Protection Bureau may be invalid following a Thursday Supreme Court ruling on recess appointments.
Richard Cordray was appointed by President Obama as director of the financial industry watchdog agency on January 2012. Obama made the move in a recess appointment, circumventing the objections of Republicans who would have blocked Cordray's nomination because they wanted to restructure the agency.
Republicans argued the Senate was in a pro forma session and not in an actual recess, and on Thursday, the Supreme Court essentially agreed, ruling that Obama's use of recess appointments to fill the National Labor Relations Board was in violation of the Constitution.
“President Obama appointed Richard Cordray to head the CFPB at the same time and in the exact same manner as these unconstitutional NLRB appointees,” Hensarling, whose committee oversees the CFPB, said. “Clearly and unquestionably, President Obama exceeded his authority when he appointed Director Cordray, just as he exceeded his authority when he made these NLRB appointments.”
Cordray was eventually confirmed by Senate vote, but not until July 16, 2013, more than 18 months after he was appointed during a recess.
During that time, Cordray's agency issued 35 regulations and decisions, including truth in lending rules, regulations governing mortgages and rules defining who can take out student loans.
Hensarling called into question the validity of Cordray’s actions as head of the agency before the official Senate confirmation vote last summer.
“By the time the Senate confirmed Mr. Cordray in July 2013, he had served as Director for 18 months without legal authority,” Hensarling said. “This fact calls into question the legality of the official actions he took during this time period and may represent a legal risk for the CFPB.”
But CFPB officials disagree. They told the Examiner that Cordray had ratified all of his earlier decisions.
"We do not expect this decision to impact the CFPB or its important work. Director Cordray was confirmed by the Senate in July 2013," General Counsel Meredith Fuchs said. "The CFPB was not part of this case, and today's decision does not mention the Bureau or Director Cordray.”