CFPB’s Work Hampered by Legal Snare

The authority of the Consumer Financial Protection Bureau’s director has been undermined by a court ruling that found three of the president’s January 2012 recess appointments to be unconstitutional. But now, it’s starting to impact the Bureau’s work, Bloomberg reports

Last year, President Barack Obama appointed Richard Cordray as director of the CFPB and made three other appointments to the National Labor Relations Board.

The snag? The Senate wasn’t actually in the particular recess that would have made the appointments legitimate, according to the U.S. Court of Appeals in Washington, and they ruled that Obama’s so-called “recess appointments” to the NLRB were unconstitutional. 

That ruling impacts Cordray’s same-day appointment as well—and the CFPB in general, in a myriad of ways. 

The Obama administration has appealed the ruling to the Supreme Court, but in the meantime, House Republicans are refusing to take testimony from Cordray and a Native American tribe is refusing to provide information about its online lending business, according to Bloomberg, based on their claim that Cordray isn’t a legitimate director. 

Recruitment of Cordray’s second-in-command has been halted as well, says the article, because candidates won’t pursue the job while the director’s fate is unclear. 

The impact of the court ruling has another impact: a delay in joint ventures between state attorneys general and the CFPB for cooperative enforcement prescribed by the Dodd-Frank Act. 

“There has not been the gearing-up on consumer protection that I’d expected because of the cloud over the CFPB’s authority,” Greg Zoeller, Indiana’s Republican attorney general, said in an interview with Bloomberg. 

Read the full story

Written by Alyssa Gerace

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