Obama to Appoint Cordray as Head of Consumer Bureau

Julia Edwards
January 4, 2012

President Obama will appoint Richard Cordray on Wednesday as head of the Consumer Financial Protection Bureau during the Senate’s recess, the White House said.

The appointment comes to the dismay of Senate Republicans, who blocked Cordray’s nomination in order to weaken the bureau created by the Dodd-Frank financial-regulation law.

At a Dec. 8 news conference called after Democrats could not overcome Republicans' filibuster of the nomination, President Obama said he wouldn’t take any option off the table but a recess appointment was not an option he favored.

"My hope and expectation is that the Republicans who block this nomination come to their senses," Obama said at the news conference. "And I know that some of them have made an argument, we just want to sort of make modifications in the law. Well, they are free to introduce a bill and get that passed."

But the Senate did not make any amendments to the power Cordray would have as head of the CFPB, focusing instead on year-end deals for the remainder of December. Without a leader, the CFPB has no jurisdiction over non-bank financial institutions, including some mortgage lenders.   

Obama is scheduled to make his first public appearance of 2012 in Cordary's home state of Ohio at an event in the suburbs of Cleveland.

(RELATED: Obama Heads to Cleveland to Turn Heat on GOP, Rally His Base)

Asked about the pending appointment, Senate Majority Leader Harry Reid, D-Nev., said on Wednesday, "I think it's a good idea."

Senate Minority Leader Mitch McConnell, R-Ky., said Cordray will be an appointee in “uncertain" legal territory.

“Although the Senate is not in recess, President Obama, in an unprecedented move, has arrogantly circumvented the American people by 'recess' appointing Richard Cordray as director of the new CFPB,” McConnell said in a statement.

“This recess appointment represents a sharp departure from a long-standing precedent that has limited the president to recess appointments only when the Senate is in a recess of 10 days or longer," he continued. "Breaking from this precedent lands this appointee in uncertain legal territory, threatens the confirmation process, and fundamentally endangers the Congress’s role in providing a check on the excesses of the executive branch."

After Air Force One landed and the president's motorcade picked up Cordray, the former Ohio attorney general told reporters: "We're gonna begin working to expand our program to non-banks, which is an area we haven't been able to touch up until now," before being pulled away by White House spokesman Jay Carney.

Before arriving in Cleveland, Carney called the appointment "a no-brainer."

Cordray "won a majority of support in the Senate yet Republicans refused to allow him an up-or-down vote," Carney said. "The president is committed to working with Congress but if Congress refuses to act, the president will act. Gridlock in Washington is not an excuse for inaction." 

Consumer groups sidestepped the legal issues and praised the expected move.

"Until now, the CFPB has been fighting mounting consumer-financial abuses with one arm tied behind its back," stated Travis Plunkett, legislative director for the Consumer Federation of America.

Progressive Change Campaign Committee cofounder Adam Green said, "This recess appointment of Rich Cordray pushes aside some of Wall Streets biggest protectors, and now the job of holding Wall Street and big corporations accountable can finally be done the way Elizabeth Warren envisioned -- carried out by one of her allies."

Green, who's group is one of Warren's biggest advocates as she seeks to unseat Sen. Scott Brown, R-Mass., this year, was referring to Warren's work setting up the CFPB. 

Although the House has no say in the confirmation process, House Speaker John Boehner, R-Ohio, weighed in anyway. Echoing what is emerging as the GOP talking point on the issue, Boehner called the move “an extraordinary and entirely unprecedented power grab by President Obama that defies centuries of practice and the legal advice of his own Justice Department.

"It’s clear the president would rather trample our system of separation of powers than work with Republicans to move the country forward," Boehner continued in his statement. "This action goes beyond the president’s authority, and I expect the courts will find the appointment to be illegitimate."