Obama has appointed controversial Harvard Law Professor Elizabeth Warren to informally run the powerful, newly-created Bureau of Consumer Financial Protection that will regulate the banking industry and consumer lending. To avoid having the Senate vote on her nomination (as the Constitution’s Appointments Clause clearly requires for such presidential appointees), which might result in her nomination being defeated, the administration has formally appointed her not to be Director of the Bureau (the position she will in fact be exercising), but rather to two other White House and Treasury Department positions that did not historically require Senate confirmation — positions from which she will informally control the Bureau. In essence, President Obama is circumventing constitutional checks and balances, as Yale Law Professor Bruce Ackerman, a staunch liberal, notes today in The Wall Street Journal.
The economically-destructive Dodd-Frank law that sets up the new Bureau of Consumer Financial Protection itself has constitutional problems. For example, Dodd-Frank sets up a Financial Stability Oversight Council that includes four members picked not by the president, but rather by associations of state officials such as banking regulators and insurance regulators. That seems to violate the Constitution’s Appointments Clause under cases like FEC v. NRA Political Victory Fund, 6 F.3d 821 (D.C. Cir. 1993), which say that even non-voting members of independent agencies generally have to be picked by the president, and can never be picked by people outside the executive branch. (The Council members picked by state associations are non-voting, which does not mean that they will not have influence or be excluded from important deliberations.) The Dodd-Frank law also contains provisions that could spawn another mortgage crisis, and are backfiring on consumers.