WASHINGTON, D.C., July 17, 2013 — Richard Cordray has been approved as director of the Consumer Financial Protection Bureau (CFPB), 19 months after he was controversially installed in what many are calling an illegal move by the Obama administration.
Cordray was appointed on the same day and in the same way as two members of the National Labor Relations Board. President Obama claimed these appointments were recess appointments; however, as the Competitive Enterprise Institute and others have pointed out, the Senate was not in recess at the time. CEI is a co-plaintiff in a lawsuit challenging the constitutionality of the Cordray recess appointment as well as other constitutional defects of the CFPB.
The D.C. Circuit Court of Appeals has ruled that the NLRB recess appointments were unconstitutional; the Supreme Court decided to review that case several weeks ago. Though no court has yet ruled on Cordray’s recess appointment, there is no reason to think it was any more valid than those of the NLRB members.
Sam Kazman, general counsel of CEI, said Cordray’s recess appointment is but one aspect of its constitutional challenge to the CFPB. Other aspects of the case are unaffected, and impact of the confirmation on the recess appointment claim is unclear.
“But if Cordray’s confirmation does affect our recess appointment claim—a big if—and if Cordray supports the long-running White House claims his recess appointment was valid, then we challenge him to do the following: ‘Do not reauthorize any actions taken in the past by the CFPB. By not engaging in such reauthorizations, you will reduce any questions that might exist about whether this issue can be addressed by the court.’”
CEI, a longtime member of bipartisan coalitions on privacy and civil liberties, has also been strongly critical of the database CFPB is building with confidential information from 900 million credit card accounts.
CEI experts question CFPB’s lack of checks and balances and Cordray’s record of overreach in building the unauthorized database and regulating without transparent rules.
John Berlau, CEI Senior Fellow for Finance and Access to Capital, said: “It’s too bad too many senators, in trying to avoid the ‘nuclear option’ on filibusters, are overlooking the CFPB’s nuking of consumer privacy through its unauthorized data collection efforts. According to news reports and testimony before Congress, CFPB is building a database of personal financial transactions that will rival that of the National Security Agency, without even the excuse of fighting terrorism. At a House hearing last week, the CFPB’s acting deputy director admitted the goal was to have an active working database of 900 million credit card accounts—80 percent of the U.S. credit card market. And this data is collected not pursuant to a transparent rule, but through demands on financial institutions during their examinations by the CFPB. Many have objected to the lack of checks on the CFPB, but through his reckless actions as head of the CFPB during his unconstitutional tenure there, Cordray has made this fight about ‘the man’ and his record.”