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ANALYSIS: Obama Consumer Chief Decision Under a Legal Cloud

Wednesday, 04 January 2012 06:03 PM

 President Barack Obama's appointment of Richard Cordray to head the Consumer Financial Protection Bureau could become entangled in a legal battle over its legitimacy, though history and the U.S. Constitution appear to favor him, experts said.

The White House said on Wednesday Obama would use his constitutional authority to install Cordray while Congress was not in session, drawing anger and criticism from rival Republicans who insisted Congress was not in formal recess.

While the Senate resumes lawmaking only on Jan. 23, it has been holding brief non-legislative "proforma" sessions every three days to try to keep Obama from making recess appointments without its consent. The last, on Tuesday, was for a minute; the next is on Friday.

Infuriated Republicans denounced Obama's action on Wednesday as unprecedented, but history shows similar appointments were made during the presidencies of both Democrat Harry Truman and Republican Theodore Roosevelt.

White House lawyers determined the Senate was in recess as long as it was not conducting legislative business and Obama could therefore move ahead with Cordray's appointment under the Constitution, presidential spokesman Jay Carney said. He said this was also the view during the George W. Bush administration.

Also on Wednesday, Obama announced plans to "recess-appoint" three members to the National Labor Relations Board, potentially raising issues for that agency as well.

While Republican Senate Minority Leader Mitch McConnell assailed the "uncertain legal territory" of the presidential action, it seemed unlikely the issue would be resolved anytime soon in the courts. Legal challenges of agency decisions often take months, if not years.

But the U.S. Chamber of Commerce, which fiercely opposed creation of the consumer protection bureau, said it would not rule out a legal challenge to Cordray's appointment and it could weigh heavily on future actions by the watchdog.

"One of the lawyers we consulted on this said 'if you are bringing a suit on a rule against this agency and you didn't raise this issue you could be charged with legal malpractice,'" said David Hirschmann, head of the group's Center for Capital Markets Competitiveness.

Cordray told Reuters he was ready to get down to work and would not be distracted by possible legal challenges. "I can't be distracted by that," he told Reuters after flying to Cleveland on Air Force One with Obama.

The battle over nominations dates back to the Bush administration when Democrats kept the Senate in similar "proforma" sessions to try to block recess appointments by the Republican president, not leaving for more than three days.

Under the Constitution, the House of Representatives and Senate must agree on any recess lasting longer than three days. Republicans who control the House have blocked any longer breaks in hopes that would prevent appointments by Obama.

The nonpartisan Congressional Research Service said in a report last month the Constitution did not specify how long the Senate must be away for recess appointments to be made but Republicans pointed to a 1993 Justice Department legal brief that said they had to be away longer than three days.

One law professor said that brief wrongly referred to the constitutional requirement that the two chambers have the approval from one another to break for more than three days and that the courts will likely be hesitant to intervene now.

"There is no minimum time needed to trigger the president's recess appointment authority," said Catholic University Columbus School of Law professor Victor Williams, adding that he doubted the courts would look favorably on a legal challenge.

"The courts are very reluctant to second guess the political branches when a duty has been given to political branches, explicitly, textually by the Constitution," he said.

The congressional report found two examples of appointments made during recesses of less than three days, though they were done after Congress completed a session and before they began the next one.

President Theodore Roosevelt made some 160 appointments in 1903 when Congress was gone for less than a day, and the Truman administration made one appointment in 1949 when the Senate was gone for two days, the report said.

"As far as can be determined, no succeeding president has made recess appointments under similar circumstances," the CRS report said. "The shortest recess during which appointments have been made during the past 20 years was 10 days."

Republicans also pointed to an Obama administration official referring to the three-day recess precedent in a legal argument before the Supreme Court, but the justices did not address that issue and were rather focused on the legitimacy of decisions by a government agency that did not have a quorum of members.

One banking industry consultant noted that with Cordray's appointment, it may speed legal challenges to the financial regulatory reform law known as Dodd-Frank.

"The issue is not so much Cordray, or whoever is the director, but the CFPB itself and some of the powers it has been given under Dodd-Frank," said Bert Ely.

© 2019 Thomson/Reuters. All rights reserved.

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Wednesday, 04 January 2012 06:03 PM
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