Many were caught by surprise when President Obama suddenly recess-appointed Richard Cordray to head the Consumer Financial Protection Bureau while the Senate was still in session. Yet the president’s action is only the latest in a string of events that raise the question: If the CFPB acts without regard to the law from the start, how will it proceed without congressional oversight, insulated as it is, buried deeply within the Federal Reserve?
Once the bureau was created, Obama balked at sending Elizabeth Warren through the confirmation process to become the director. Warren, one of Harvard’s highest-paid professors (now running for Senate in Massachusetts), had championed the CFPB’s creation and was said to be the only person who could kick-start the new regulatory regime.
The president appointed Warren to become a “special adviser” to the treasury secretary, where she acted as a de facto interim head of the agency, without ever facing the Senate confirmation vote Obama feared she would lose.
Warren’s position was so tied to CFPB that the agency’s original website included an entire page titled “Meet Elizabeth Warren,” and a separate one sharing her calendar.
The site at the time said: “Her mission in establishing the Consumer Financial Protection Bureau is to give American families tools to make the choices that are right for them.”
Warren was even given two offices: one at the Treasury Department, and the other at the CFPB’s L Street headquarters. Politico cited sources saying that an eternal debate raged on about what color her office would be painted during a redecorating.
In October 2010, CNN reported that Warren was meeting with industry leaders on behalf of the CFPB and working with the Federal Reserve to write rules that her agency wouldn’t be able to issue itself without a properly confirmed director.
To summarize: She wrote rules. She met with executives. She hired staff. She even had two separate offices. Yet taxpayers are supposed to believe she was merely some kind of special adviser and not CFPB’s interim director?
She seemed to be doing everything the Dodd-Frank Wall Street Reform and Consumer Protection Act, which created the CFPB, called for in a director. This position would be “appointed by the president with the advice and consent of the Senate.”
That director is responsible for appointing a board of governors and establishing different offices. The legislation (in Section 1011) enumerates how the director, upon senate confirmation, will effectively be responsible for the structure and staffing of the entire organization.
If the legislation named it, Warren was doing it without the Senate’s approval. Her ascent more resembled a cult or a royal court than a feature of American democracy.
In choosing the leader of an agency established to clarify tough-to-understand mortgages and write rules for the finance industry, the president found a loophole and installed its director.
It’s a small wonder that Obama didn’t just go all the way, as he now has with Cordray, and recess appoint Warren during an actual recess (there have been several since the agency’s creation).
But then, “make it up as you go” appears to be the CFPB’s unofficial motto. Sounds like just the regulator this economy needs.
J.P. Freire is the former associate commentary editor of The Washington Examiner.
