« Inside the Foreclosure Reviews | Main | NLRB and CFPB: Recess Appointments »

Recess at the CFPB?

posted by Bob Lawless

As has been widely reported , the D.C. Circuit today ruled unconstitutional the president's power to make recess appointments. This is a good thing. The ruling draws into question not only draws into question the National Labor Relations Board's power but also draws into question the regulatory powers of the Consumer Financial Protection Bureau because its current directors, Richard Cordray, was a recess appointment. This is a bad thing -- a very bad thing.http://static.typepad.com/.shared:v20130109.02-0-g7da7b3c:typepad:en_us/tiny_mce/

The CFPB was not given its full powers until the president appointed its director. Thus, to the extent the D.C. Circuit's ruling calls into question Cordray's recess appointment -- and it is difficult to see how it does not -- then the CFPB's post-creation regulatory and enforcement actions may all be a nullity. All of these actions might have to start over from scratch. I suppose the CFPB might be able to get appellate review of the issue in a different court of appeals. The D.C. Circuit's ruling, however, already created a circuit split with the 11th Circuit. The issue seems a likely one for the Supreme Court to take.

Because of the era in which we live, today's ruling will be interpreted primarily through a political lens. The NY Times headline currently reads, "Obama Recess Appointments Are Blocked By Court." It is probably not entirely coincidental that a Republican panel on the D.C. Circuit found President Obama lacked authority to issue these recess appointments, while the 11th Circuit was more sympathetic to President George W. Bush's power to make a judicial recess appointment (although that court was roughly split between Demorcrat- and Republican-appointed judges). With the current political configuration, the decision is a short-term victory for corporate America as it provides a tool to battle regulations designed to protect workers and consumers.

In the long run, however, we are probably best rid of recess appointments. Rather than an uncommonly used device to deal with emergency situations that might arise, recess appointments have become a routine tool that both Democratic and Republican presidents have used to bypass the Senate. Because senators know the president can use a recess appointment to avoid the consequences that Senate obstinacy might create, senators are emboldened to create gridlock in presidential nominations. In the short term, the constitutional cloud hanging over recess appointments will probably lead to more pain as political gridlock causes important government functions to go undone. In the long run, however, these problems should create pressure to fix the gridlock and fix the problems rather than sidestepping them through recess appointments.

For more analysis on what today's ruling means for the Cordray nomination, Carter Dougherty has been on top of the story over at Bloomberg here and here.


So Bob, you're making the Lenin argument here--the decision is good because it will help make things so bad that they blow up and have to get fixed (e.g., by a more radical paring back of the filibuster). I get the logic, but am not as sanguine about whether things will be fixed.

I'm taking the long view -- the very long view. In 20, 50, or 100 years, we will be a better republic with legislative checks on presidential appointment power. Things will get fixed. As bad as things are now, they are not the worst in our nation's history.

The comments to this entry are closed.


Current Guests

Follow Us On Twitter

Like Us on Facebook

  • Like Us on Facebook

    By "Liking" us on Facebook, you will receive excerpts of our posts in your Facebook news feed. (If you change your mind, you can undo it later.) Note that this is different than "Liking" our Facebook page, although a "Like" in either place will get you Credit Slips post on your Facebook news feed.

News Feed



  • As a public service, the University of Illinois College of Law operates Bankr-L, an e-mail list on which bankruptcy professionals can exchange information. Bankr-L is administered by one of the Credit Slips bloggers, Professor Robert M. Lawless of the University of Illinois. Although Bankr-L is a free service, membership is limited only to persons with a professional connection to the bankruptcy field (e.g., lawyer, accountant, academic, judge). To request a subscription on Bankr-L, click here to visit the page for the list and then click on the link for "Subscribe." After completing the information there, please also send an e-mail to Professor Lawless (rlawless@illinois.edu) with a short description of your professional connection to bankruptcy. A link to a URL with a professional bio or other identifying information would be great.