Alert March 19, 2013

Senate Committee Votes to Recommend Richard Cordray as Director of the CFPB

Despite the contentious confirmation hearing, the Senate Committee on Banking, Housing, and Urban Affairs voted to recommend Richard Cordray as Director of the CFPB. Mr. Cordray has served as acting director since his recess appointment in January 2012, but was re-nominated to obtain Senate consent before the recess appointment expires at the end of 2013. Shortly after Mr. Cordray’s re-nomination, the United States Court of Appeals for the District of Columbia Circuit called into question the constitutional validity of President Obama’s "recess" appointments. In Canning v. Nat’l Labor Rel. Brd., 705 F.3d 490 (Fed. Cir. 2013), the Federal Circuit held that the recess appointments of three members of the National Labor Relations Board was unconstitutional (see February 5, 2013 Alert). The Federal Circuit’s ruling could have implications for Mr. Cordray’s initial appointment as Director of the CFPB as he was appointed along with the members of the NLRB and his appointment has been challenged on similar constitutional grounds (see June 26, 2012 Alert).

Similar to past concerns raised, at the confirmation hearing, Senator Mike Crapo of Idaho expressed concerns that the CFPB was subject to inadequate Congressional oversight and noted that the Canning decision should also apply to Mr. Cordray. Prior to the hearing, Representative Jeb Hensarling, Chairman of the House Financial Services Committee, wrote a letter to the FRB questioning whether the CPFB could be lawfully funded without a lawfully appointed director at the helm to request the funds.