House Financial Services Committee Chairman Jeb Hensarling expressed concern regarding the funding of the CFPB via the Fed, given questions surrounding the constitutionality of CFPB Director Richard Cordray’s appointment to the position.
Hensarling pointed to a January court ruling that found Cordray’s appointment to the position to be unconstitutional.
“The Dodd-Frank…Act authorizes the board to transfer funds to carry out the authorities of the CFPB only at the request of its director,” the letter said. “Because it appears there is not presently a validly-appointed director of the CFPB, I question the circumstances under which the Board may lawfully fund the CFPB’s operations.”
President Obama used the power of recess appointments to install Cordray as director of the watchdog agency, as well as install three other individuals to the National Labor Relations Board. The court ruled Cordray’s appointment unconstitutional because the Senate was in an intrasession–an informal break within a session of Congress–not an intersession.
“I believe that decisions to fund the CFPB must be scrutinized by, and traceable to, a properly appointed officer of the United States, consistent with Dodd-Frank’s intent and the constitutional requirement that significant authority of the United States be exercised only by such officers,” the letter said.
Critics of the CFPB have vowed to block the re-appointment of Cordray if key changes were not made to the agency, including the replacement of the director with a bipartisan, five-member board and subjecting the agency’s budget to the congressional appropriations process.