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Cordray sees slim chance his CFPB appointment could be overturned

April 19, 2012|By Jim Puzzanghera
  • President Obama with Richard Cordray, whom he appointed to be director of the Consumer Financial Protection Bureau, at Shaker Heights High School in Ohio.
President Obama with Richard Cordray, whom he appointed to be director… (Haraz N. Ghanbari / Associated…)

WASHINGTON -- The head of the Consumer Financial Protection Bureau acknowledged there is a slim chance his controversial recess appointment could be overturned, according to an email obtained by a government watchdog group.

"There is a chance (a minor chance in my view, though everyone is entitled to his or her own opinion) that the appointment would be invalidated by a court," Richard Cordray wrote to the agency's staff in a Feb. 6 email titled "Weekly Message."

The email came a little more than a month after President Obama installed Cordray as director with a recess appointment. Nearly all Senate Republicans had blocked attempts to confirm Cordray's nomination to head the agency, the centerpiece of the 2010 overhaul of financial regulations.

The appointment broke with two decades of White House precedent because it was made during a short Senate recess.

Many Republicans and business groups were outraged and have threatened legal action to overturn the appointment. Judicial Watch, a conservative watchdog group, obtained the email as part of a Freedom of Information Act request for agency documents related to the appointment.

“Many have doubts about the constitutionality of Richard Cordray’s appointment.  Now we know those doubts are shared by Cordray himself," said Judicial Watch President Tom Fitton. "These astonishing documents provide further evidence that Obama’s recess appointment of Cordray was an abuse of office.”

CFPB spokeswoman Jennifer Howard said Thursday that the Judicial Watch documents echo what Cordray has said publicly.

"As Director Cordray has stated on several occasions, he believes the appointment is valid but is focusing his attention on the bureau's important work protecting consumers," she said. "The  documents published by Judicial Watch are entirely consistent with that focus."

The documents largely contained copies of statements from members of Congress reacting to Cordray's Jan. 4 appointment, with Democrats praising the move and Republicans objecting.

Reacting to the controversy over the appointment, Camden Fine, president of the Independent Community Bankers of America, emailed a CFPB official on Jan. 4 wondering why Obama didn't make the move earlier and install Elizabeth Warren.

Warren, a Harvard law professor, originally proposed the idea of a consumer agency and worked as an administration advisor for nearly a year to help set it up. Republicans strongly opposed the idea of her heading the agency and the White House opted not to nominate her.

She now is running for the Senate in Massachusetts as a Democrat.

Fine asked Elizabeth Vale, the consumer bureau's assistant director for community banks and credit unions, that if Obama was going to "take the firestorm" ignited by a recess appointment "why didn't he do that for big Elizabeth?"

"Richard is a good man, but come on, Elizabeth put her heart and soul into that agency -- she deserved her shot," Fine wrote.

Fine had publicly praised Warren for her outreach to community banks.

The Obama administration has said that Cordray's appointment was valid, as were those of three people to the National Labor Relations Board made on the same day.

Backed by a Justice Department memo, the administration has argued that the Senate's short, pro forma sessions every third day during the traditional Christmas holiday break were designed to prevent Obama from using his constitutional authority to fill vacancies during recesses.

Cordray has been careful in public comments not to say much about the legality of the appointment.

At a Jan. 31 Senate hearing, he said that it was "not clear cut by any means that this is not a valid appointment. I believe it is."

"I have been appointed as director," he continued. "There may be issues about that … but  I now have legal obligations I’m supposed to carry out for this bureau. I’m going to do that."

In the Feb. 6 email, Cordray told the agency's staff that despite the possibility a legal challenge could unseat him, "it is hard to see how we can do anything other than concentrate on doing our job as well as we can -- including me especially."

Cordray said that because the recess appointment limited his term to two years instead of the five years a Senate-confirmed director would receive, the agency should have "a fierce urgency to accomplish the work we are doing together."

A lawsuit suit challenging the NLRB appointments has been filed in Washington state, and has been joined by the U.S. Chamber of Commerce. Senate Republicans said this week they would join the case as well.

No similar lawsuit against Cordray's appointment has been filed yet, but a decision in the NLRB case could affect him.

RELATED:

Republicans say consumer chief controversy will hurt businesses

Richard Cordray appointment 'turns lights on' at consumer bureau

Obama bypassing Senate to appoint Richard Cordray consumer chief

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