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The Consumer Financial Protection Bureau has been one of the most reliable sources of controversy in political and business circles, and now President Obama has thrown more fuel on the fire by announcing a recess appointment of Richard Cordray to head the new regulatory agency. In a post on The BLT: The Blog of LegalTimes (a CorpCounsel.com sibling publication), Zoe Tillman wrote that Obama’s move used the recess appointment as a way of “challenging Senate Republicans who last month blocked a vote on Cordray. . . Obama’s pick to lead the agency in July. The Senate Committee on Banking, Housing and Urban Affairs voted to approve the nomination in October, but he faced stiff resistance from Senate Republicans, who had vowed to block the confirmation of any director back in May. Last month, the Senate voted 53 to 45 to block a vote on his confirmation from proceeding.” Writing for The Washington Post, Suzy Khimm points out that “Even before Wednesday’s recess-appointment, Republicans made it clear that their primary objections were based on the power structure of the agency itself, not the qualities of the candidate Obama chose to ran it.” As such, more attention has been paid to the politics of the appointment than to the man who now is poised to actually take the reins of the agency. Khimm’s thumbnail sketch of Cordray’s background as an Ohio politician outlines his “pro-consumer, anti-Wall Street background,” but she points out that “it remains to be seen, however, exactly what path the CFPB will take under Cordray’s leadership. During his Senate confirmation hearings, he tried to assuage concerns that he would quickly resort to litigation to carry out the agency’s mandate, in line with his work as attorney general.” White House communications director Dan Pfieffer released a statement explaining the appointment as one that will “strengthen oversight and accountability in order to protect millions of families across the nation,” and defends the move on the grounds that “the Constitution gives the President the authority to make temporary recess appointments to fill vacant positions when the Senate is in recess, a power all recent Presidents have exercised.” But as the 2012 presidential race continues to accelerate, Obama’s move to install Cordray at the CFPB is bound to incite charged political responses. The Republican Speaker of the House, John Boehner, released a statement saying “This is an extraordinary and entirely unprecedented power grab by President. . . This position had not been filled for one reason: the agency it heads is bad for jobs and bad for the economy.” Senate Minority Leader Mitch McConnell echoed that sentiment in his own statement, saying “The CFPB is poised to be one of the least accountable and most powerful agencies in Washington. Created by the deeply flawed Dodd-Frank law, it is subject to none of the checks that independent agencies normally operate under, and will have an unprecedented reach and control over individual consumer decisions.” And Reuters reports that the U.S. Chamber of Commerce “would not dismiss the option of a suit challenging President Obama’s recess appointment of Richard Cordray to head the new consumer agency.” But the political calculus could also work in Obama’s favor. In The Atlantic, James Warren calls the move “smart and necessary,” and goes on to say:

. . . we really do need some coordinated oversight of lending practices and financial products involving consumers. Creating the agency was quite a feat, especially given decades of bureaucratic drift that left multiple agencies feeling empowered to monitor bits and pieces of our consumer lives, albeit in often half-hearted and unfocused ways. It’s basic civics, but one of the more important things that a regulatory agency does—especially a financial regulator—involves supervision. It means having federal personnel inside financial institutions. But in a Dodd-Frank quirk, the law splits the basic supervisory authority. One year after enactment, the agency could begin supervising banks. But it could not begin supervising non-financial institutions until after it had a permanent director. That’s why Cordray is really important.

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