Obama Plays Hardball

January 5th, 2012
in econ_news

Econintersect:  President Obama has circumvented Republican opposition and made a recess appointment of former Ohio Attorney General Richard cordrayCordray (pictured, click on photo for larger image) as head of the Consumer Financial Protection Bureau (CFPB).  The CFPB was formed with the leadership of Harvard professor and consumer advocate Elizabeth Warren, currently running for the Democratic nomination for Senator from Massachusetts.  The new agency was authorized as a provision of the Dodd-Frank Act (2010).  It was reported that Obama initially was considering Warren for the position but her name was withdrawn from consideration because of opposition from Republicans.  Republicans claim the recess appointment is illegal because, although the Congress is not in session, it is not in recess either.

Follow up:

Cordray was nominated in July and confirmation hearings were held in September.  Since then Senate Republicans have succeeded in keeping the name brought up for a vote because the 53 Democrats could not get seven Republicans to join them to vote for cloture to prevent a filibuster.

Bloomberg says that Obama’s action will raise legal questions that could end up in court and also that the appointment could impede Republican action to address other presidential initiatives such as pending nominations of judges and members of the federal reserve Board, as well as proposals in the jobs bill.  Obama will also need Republicans to act on the extension of the payroll tax cut to a full year.

The argument arises because previous court decisions have determined that once Congress has been in recess for three days the President has the right to make direct appointment without Congressional approval provided there is an urgent need.  Obama spoke today with his justification (ABC News):

“Without a director in place, the consumer watchdog agency that we’ve set up doesn’t have all the tools it needs to protect consumers against dishonest mortgage brokers or payday lenders and debt collectors who are taking advantage of consumers. And that’s inexcusable. It’s wrong, ” Obama said in Ohio today with Cordray at his side.

Republican leaders have spoken out immediately.  Here is an excerpt from Bloomberg:

“Breaking from this precedent lands this appointee in uncertain legal territory, threatens the confirmation process and fundamentally endangers the Congress’s role in providing a check on the excesses of the executive branch,” said McConnell, of Kentucky.

House Speaker John Boehner, an Ohio Republican, called the appointment an “extraordinary and entirely unprecedented power grab” by the president.

In his statement, McCone used strong terminology:  ‘Obama “arrogantly circumvented” the American people’ and ‘upended “long-standing” practices that limited recess appointments.’  A Fox News story had the headline:

Obama’s Cordray Appointment Mocks the Constitution

The last session of Congress ended December 22, at least that’s when they last conducted business.  However, Republicans refused to adjourn for the holiday break, instead electing to hold pro forma sessions every three days, even if for just a few members of Congress living close to Washington DC and even if the “meeting” lasted for only a few seconds.  This prevented the existence of any three day periods where congress was not in session so that the traditional (and court supported) recess appointment conditions would never arise.

Note: From what Econintersect has been able to determine, courts have never ruled on recesses of less than three days and there has never been a ruling on the constitutionality of pro forma sessions.

The pro forma strategy was used by Democrats to block G. W. Bush from making recess appointments when he was president.  However, Bush still managed to get some of these accomplished - and much more so than Obama.  According to USA Today, at the same juncture in his presidency Bush had made 61 recess appointments and Obama has 28.

So this is what we have to look forward to for another ten months – election year crazies, which this editor thinks has been going on for the past three years already.

Sources: The New York Times, Fox News, Bloomberg, USA Today and ABC News

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