Cordray Recess Appointment is Travesty for Government Accountability

News is just breaking that President Obama will today make a “recess” appointment of Richard Cordray to head the Consumer Financial Protection Bureau, a powerful and largely unaccountable regulatory bureaucracy created by the Dodd-Frank financial “reform” law rammed through Congress in 2010.

Such a move would be a horrific precedent on many levels for government accountability. It would be an appointment made by broadly defining “recess” to an entity over which Congress has no effective oversight of a nominee with a checkered history as Ohio AG’s of directing state money to confrontational “community organizers” as well as his trial lawyer supporters.

Let’s take these one at a time. The Senate is now in “pro forma” session, in which a handful of senators meet in the Senate every three days, as part of the agreement with the Republican-controlled House to adjourn Congress. The Democrat-controlled House and Senate did the same thing during the last year of the George W. Bush administration. During the 2007-08 pro forma session, as noted by the nonpartisan Congressional Research Service and reported by Politico, President Bush “made no recess appointments between [Democrats’] initial pro forma sessions in November 2007 and the end of his presidency.”

President Obama arguably had a window yesterday in the few seconds between the first and second session of Congress, but didn’t exercise this opportunity. If he appoints Cordray now, he sets a precedent that Democrats and critics of the “Imperial Presidency” will likely regret the next time  there is a Republican president and Democrats control one or both houses of Congress. If any adjournment or break the Senate takes can be defined as “recess,” can the president make appointments when the Senate is in formal session and gavels out for the evening? Our long-held tradition of checks and balances advises strongly against going down this road.

And, in this case, the CFPB itself shatters precedents, as well as specific Constitutional provisions, on checks and balances in regulatory agencies. Once a director is appointed, Congress has no effective oversight of the bureau through the appropriations process, as it does with other agencies.

As C. Boyden Gray, White House Counsel under George H.W. Bush and respected legal scholar, has written in the Cincinnati Enquirer: “Congress nullified its own primary oversight power by immunizing CFPB against Congress’s power to control agency budgets. CFPB can simply take up to 12 percent of the Federal Reserve’s operating expenses — roughly $400 million — no questions asked. Dodd-Frank prohibits Congress from even attempting to ‘review’ that budget.”

More shocking, Dodd-Frank even restricts the judicial branch, which liberals rhetorically champion as a bulwark of “independence,” in reviewing the CFPB’s actions. Gray writes that “rather than allowing the courts to fully review the CFPB’s actions, Dodd-Frank requires the courts to defer to CFPB’s legal interpretations.”

Then there is the nominee’s troubled history as an Ohio politico, a history that Buckeye state voters took into account when they removed him from office in favor of Republican Mike Dewine in 2010. Senate Republicans have focused more on the structural defects of the CFPB, but Cordray’s nomination would be troubling even if those weren’t at issue.

Last month in The American Spectator, I wrote about Cordray’s longtime support of the East Side Organizing Project or ESOP, an Ohio “housing” group that has distinguished itself storming banks and throwing plastic sharks on the lawns of private homes. ESOP’s executive director is on record telling Bloomberg that Cordray specifically approved of these tactics when he met with the group.

Cordray has praised ESOP as “the real heroes” and directed state funding the group’s way when he was AG and, before that, as state treasurer. And in a highly unusual move for a nominee awaiting confirmation, Cordray returned to Ohio in October to be the keynote speaker at the group’s gala dinner, in a somewhat secretive speech that does not appear on the ESOP or CFPB web site.

In addition, BigGovernment.com and others exposed a pattern of trial lawyer contributors to Cordray suddenly getting lucrative business from his office in helping the state with lawsuits against financial firms. The Capitol Confidential column at Big Government notes: “Cordray has a scandalous record of ‘taking money from lawyers who profit from private litigation that often follows closely on the heels of government investigations…’So, the reality is that President Obama’s liberal white-hatted regulator appears to be neck deep in a pay to play scandal with trial lawyers.”

On top of this there is the broad powers the CFPB would have over Main Street businesses that have nothing to do with the crisis. As was warned before Dodd-Frank passed, its power to ban “financial products” of “nonbanks” could extend to any form of credit extended to consumes, including a layaway plan by a small store. There can be no transparency and accountability in the financial system without transparency and accountability in the bureaucracies that control it.