House Financial Services Committee Chairman Jeb Hensarling sent a letter to Federal Reserve Chairman Ben Bernanke on Tuesday, warning that CFPB Director Richard Cordray’s previous appointment to the position could be deemed invalid.
A Washington D.C. appeals court ruled in January that President Obama’s use of the power of recess appointments to install Cordray as CFPB director, as well as three other individuals to the National Labor Relations Board, was unconstitutional. The court said that because the Senate was in an intrasession, an informal break in a session of Congress, rather than an intersession, a formal congressional recess, the appointments were unconstitutional.
“As you know, the Dodd-Frank Wall Street Reform and Consumer Protection Act authorizes the board to transfer funds to carry out the authorities of the CFPB only at the request of its director,” Hensarling said on the same day Cordray appeared before Congress for his confirmation hearing. “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.”
“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,” said Hensarling.
Many congressional Republicans have vowed to block Cordray’s re-appointment to the position of CFPB director unless key changes are made to the agency, including the replacement of Cordray with a bipartisan, five-member commission and the placement of CFPB funding under the congressional appropriations process.