Tags: Obama | Recess | Appointments | Cordray

Obama's 'Recess' Picks Shred Checks and Balances

By    |   Thursday, 05 Jan 2012 12:37 PM

Yesterday morning, President Obama made a "recess" appointment of Richard Cordray to head the Consumer Financial Protection Bureau (CFPB), a powerful and largely unaccountable regulatory bureaucracy created by the Dodd-Frank financial "reform" law rammed through in 2010.

Then yesterday, he “recess” appointed three members of the National Labor Relations Board.

But there is one big problem with these appointments — Congress is not in recess

The Cordray appointment is a disturbing body blow to our constitutional system of checks and balances in three ways:
  1. In all the appointments, President Obama broadly defined "recess" as any adjournment of Congress. What's next, appointing nominees when the Senate takes a lunch or bathroom break?
  2. Dodd-Frank puts severe limits on both Congressional and judicial oversight over the CFPB's actions.
  3. As Ohio Attorney General, Cordray directed state money toward a confrontational community organizing group and to trial lawyers who contributed to his campaigns
Let's take these one at a time.

The Senate is now in "pro forma" session, in which a handful of senators meet in the Senate every three days, as part of the agreement with the Republican-controlled House to adjourn Congress.

The Democrat-controlled House and Senate did the same thing during the last year of the George W. Bush administration. During the 2007-08 pro-forma session, as noted by the nonpartisan Congressional Research Service and reported by Politico, President Bush "made no recess appointments between [Democrats’] initial pro forma sessions in November 2007 and the end of his presidency.”

President Obama arguably had a window on Tuesday in the few seconds between the first and second session of Congress yesterday but didn't exercise this opportunity. But by making the appointments after that — when Congress clearly was not in recess — he sets a precedent that Democrats and critics of the "Imperial Presidency" will likely regret the next time there is a Republican president and Democrats control one or both houses of Congress.

If any adjournment or break the Senate takes can be defined as "recess," can the president make appointments when the Senate is in formal session and gavels out for the evening?

Our long-held, tradition of checks and balances advises strongly against going down this road.

And, in this case, the CFPB itself shatters precedents, as well as specific Constitutional provisions, on checks and balances in regulatory agencies. Once a director is appointed, Congress has no effective oversight of the bureau through the appropriations process, as it does with other agencies.

As C. Boyden Gray, White House Counsel under George H.W. Bush and respected legal scholar, has written in the Cincinnati Enquirer: "Congress nullified its own primary oversight power by immunizing CFPB against Congress’s power to control agency budgets. CFPB can simply take up to 12 percent of the Federal Reserve’s operating expenses — roughly $400 million — no questions asked. Dodd-Frank prohibits Congress from even attempting to 'review' that budget."

More shocking, Dodd-Frank even restricts the judicial branch, which liberals rhetorically champion as a bulwark of "independence," in reviewing the CFPB's actions. Gray writes that "rather than allowing the courts to fully review the CFPB’s actions, Dodd-Frank requires the courts to defer to CFPB’s legal interpretations."

Then there is the nominee's troubled history as an Ohio politico, a history that Buckeye State voters took into account when they removed him from office in favor of Republican Mike Dewine in 2010. Senate Republicans have focused more on the structural defects of the CFPB, but Cordray's nomination would be troubling even if those weren't at issue.

Last month in the American Spectator, I wrote about Cordray's longtime support of the East Side Organizing Project or ESOP, an Ohio "housing" group that has distinguished itself storming banks and throwing plastic sharks on the lawns of private homes.

ESOP's executive director is on record telling Bloomberg that Cordray specifically approved of these tactics when he met with the group.

Cordray has praised ESOP as "the real heroes" and directed state funding the group's way when he was AG and, before that, as state treasurer. And in a highly unusual move for a nominee awaiting confirmation, Cordray returned to Ohio in October to be the keynote speaker at the group's gala dinner, in a somewhat secretive speech that does not appear on the ESOP or CFPB web site.

In addition, BigGovernment.com and others exposed a pattern of trial lawyer contributors to Cordray suddenly getting lucrative business from his office in helping the state with lawsuits against financial firms.

The Capitol Confidential column at Big Government notes: “Cordray has a scandalous record of 'taking money from lawyers who profit from private litigation that often follows closely on the heels of government investigations . . . 'So, the reality is that President Obama’s liberal white-hatted regulator appears to be neck deep in a pay to play scandal with trial lawyers."

On top of this there is the broad power the CFPB would have over Main Street businesses that have nothing to do with the crisis. As was warned before Dodd-Frank passed, its power to ban "financial products" of "nonbanks" could extend to any form of credit extended to consumers, including a layaway plan by a small store.

There can be no transparency and accountability in the financial system without transparency and accountability in the bureaucracies that control it.

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