On July 16, 2013, the Senate confirmed Richard Cordray as the first Director of the Consumer Financial Protection Bureau. The 66-34 vote to confirm Cordray ends nearly two years of uncertainty over his position.
After Senate Republicans refused to allow a vote on Cordray’s confirmation, President Obama appointed him via recess appointment on January 4, 2012. However, the validity of this appointment was quickly called into question. Since that time, three U.S. Circuit Courts of Appeals have held that the President’s recess appointment of members to the National Labor Relations Board was unconstitutional. Although those cases did not directly address Cordray’s recess appointment to the CFPB, he was essentially appointed in the same manner and on the same day as the NLRB appointments being challenged.
Nonetheless, Cordray’s nomination as Director finally proceeded to a vote after Senate leaders struck a deal this week under which Republicans allowed votes on Cordray and certain NLRB members and Democrats agreed not to pursue filibuster reform. Cordray was appointed to a five-year term. Accordingly, while the matter of the validity of the appointments may be resolved, it remains to be seen whether and how the courts will address the validity of the NLRB’s rulings since the initial appointments. Certainly, the controversy surrounding Cordray’s appointment for the past 18 months did not appear to hinder the CFPB’s pursuit of a vigorous agenda of rulemakings, data collection, examinations, and enforcement actions.
In addition, other challenges to the CFPB’s authority await. One notable case, State National Bank of Big Spring, Texas, et al. v. Geithner, challenges the CFPB’s authority to prohibit unfair, deceptive or abusive acts or practices, questioning whether it violates separation of powers principles due to a lack of meaningful checks and balances on that authority. Several state attorneys general have joined the suit as plaintiffs, particularly to challenge the agency’s liquidation authority. A federal court will consider the effect Cordray’s confirmation has on the plaintiffs’ claims.