Last December, the Senate rejected President Obama’s choice for director of the Consumer Financial Protection Bureau (CFPB), Richard Cordray[1]. Not be deterred, however, the president simply waited until Congress was in a recess (although the Senate was actually in a pro forma session, just as when the payroll tax cut was extended) and appointed him anyway,  leading many to protest that the president is blatantly disregarding the Constitution and the rule of law. Recess appointments can only happen during congressional recesses, and critics of the move are arguing that the president bypassed the Senate, which had been unable to approve Cordray last summer, by appointing him when the Senate was not in a true recess. Cordray was the attorney general (AG) of Ohio from 2009 to 2011 and has made a name for himself by targeting lenders for non-transparency in lending. Cordray, who lost his bid for reelection as Ohio AG last year, has stated that he will focus particularly on “non-bank firms that often compete with banks but have largely escaped meaningful federal oversight”[2].

The controversial appointment has, not surprisingly, been greeted with outrage on the part of senators, many of whom objected to the creation of the CFPB on principal and fear that Cordray’s position is that of an “unaccountable bureaucrat.” Critics of the president’s latest appointment like popular radio talk-show host Rush Limbaugh fear that it could set a precedent for unconstitutional appointments in the future, including enabling the administration to appoint a new director of the Federal Housing Finance Agency (FHFA) and forcing through a broad home-refinancing plan that many believe would send taxes, the national debt and the housing crisis spiraling out of control[3]. However, analysts like Joshua Rosner, managing director at Graham Fisher & Company, call these concerns “irresponsible speculative leaps” that are, at best, a remote possibility.

The president has characterized his “recess” appointment of Cordray as a necessary move that indicates that he is “looking out for you, fighting for you” while “financial firms have armies of lobbyists in Washington looking out for their interests”[4]. The president added that he has an “obligation” to “do what I can without [the support of the Senate]” when that body blocks his appointments and obstructs “efforts to help the middle class.” Immediately following Cordray’s appointment, the CFPB expanded its bank supervision to non-banks as promised, wasting no time in adding additional authority under the new director.

Do you think that this appointment is valid and legal? Were the president’s actions appropriate? Is this just setting up for a massive mortgage-forgiveness program as Limbaugh suggests?

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[1] http://nationalmortgageprofessional.com/news27829/obama-sidesteps-recessed-congress-appoint-cordray-cfpb-head

[2] http://www.bloomberg.com/news/2012-01-06/obama-s-consumer-watchdog-targets-mortgage-firms-payday-lenders.html

[3] http://blogs.wsj.com/developments/2012/01/05/rush-limbaugh-mortgage-analyst/?mod=google_news_blog

[4] http://www.businessweek.com/news/2012-01-05/obama-says-cordray-appointment-will-help-protect-consumers.html