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CEI: NLRB Ruling Could Have Wide-Ranging Effects

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CEI: NLRB Ruling Could Have Wide-Ranging Effects

Appointment of Cordray at CFPB Took Place Same Day Under Same Circumstances

WASHINGTON, D.C., Jan. 25, 2013 – Legal and financial analysts at the Competitive Enterprise Institute say a court ruling the president violated the Constitution when he bypassed the Senate to fill vacancies on the National Labor Relations Board could have far-reaching effects.

“The facts and circumstances the court used to determine the NLRB officials were appointed improperly almost certainly also apply to the appointment of Richard Cordray at CFPB,” said John Berlau, senior fellow for finance and access to capital at CEI. “This means the voluminous rules the CFPB has issued affecting everything from mortgages to small businesses also now are under a constitutional cloud. The Senate should wait for a full legal ruling on Cordray’s initial appointment before he or anyone else is confirmed to fill the post permanently.”

According to the Associated Press, President Obama claims he acted properly because the Senate was away for the holidays. But the federal appeals court ruled the Senate technically stayed in session when lawmakers gaveled in and out every few days for so-called “pro-forma” sessions. If the Senate is in session, the president cannot make recess appointments.

Indeed, Cordray was appointed the same day – Jan. 4, 2012 – as the three NLRB members affected by the ruling. According to the court: “To adopt the Board’s proferred intrasession interpretation of ‘the Recess’ would wholly defeat the purpose of the Framers in the careful separation of powers structure reflected in the Appointments Clause.”

Sam Kazman, general counsel for CEI and co-counsel in the legal effort to challenge the constitutionality of the CFPB, said: “Today’s appellate decision makes clear that, when it comes to the Framers’ fundamental scheme of checks and balances, Jan. 4, 2012, is a day that will live in constitutional infamy. As a plaintiff in the pending constitutional challenge to Dodd-Frank, we’re confident Mr. Cordray’s appointment will meet the same fate as those NLRB members. They will be remembered as the Not-So-Fab-Four of the Appointments Clause.”

Matt Patterson, senior fellow for labor policy in CEI’s Center for Economic Freedom, called the decision a “stunning and well-deserved rebuke from one of the highest courts in the land. The president openly defied Congress and the Constitution to staff agencies with allies of his Big Labor money masters, and he has been called out for it in embarrassing fashion.

>> Read the decision here