A recent court ruling has caused concern among CFPB proponents regarding whether CFPB rules will remain in place and whether the recently renominated Richard Cordray will stay on as the agency’s director.
A three-judge panel of the U.S. Court of Appeals for the Washington D.C. Circuit ruled that President Obama’s recess appointment of Cordray in January 2012 was unconstitutional. President Obama used his power of recess appointments to circumvent Republican opposition and install Cordray as director, American Banker reports.
The White House said that it would appeal the ruling to the Supreme Court, an indication that Cordray may not immediately be tossed from his position. Cordray’s recess appointment, however, expires at the end of the year and the road to his second confirmation will likely be a difficult one, with a group of Republican senators indicating that they would block his nomination unless key reforms were made to the CFPB.
Many Senate Republicans oppose the idea of an agency director and have instead pushed for a five-member panel confirmed by the Senate, a request likely to be met by Democrats as they seek to protect the agency from scale-backs. Some of the agency’s fiercest advocates are no longer working under or for the agency, leading to speculation over who would serve on the five-member panel. CFPB founder Elizabeth Warren, a Democratic Senator from Massachusetts, is currently serving on the Senate Banking Committee, and Raj Date, the former deputy director of the CFPB, left the agency last week, according to American Banker.
Additionally, in a recent letter to President Obama, Senate Minority Leader Mitch McConnell (R-Ky.) and 42 Senate Republicans called for the placement of the CFPB budget under the congressional appropriations process. The CFPB draws its funding from the Federal Reserve, which has no authority to alter or reduce the requested amount by the agency’s director.