Results matching “cordray”

Recess Appointments Update - PointOfLaw Forum


Michal Benari
Summer Intern, Manhattan Institute's Center for Legal Policy

A third federal appeals court declared President Obama's recess appointments to the National Labor Relations Board (NLRB), a 5-member board which referees labor-management disputes and oversees union elections, to be unconstitutional, on the grounds that the Senate was not officially in recess during the extended holiday break in January 2012 when these three contentious vacancies were filled. The significance of the ruling was depicted on Wednesday, as the Fourth Circuit refused to enforce two NLRB decisions, together with the dissent in federal appeals courts in both Philadelphia and the District of Columbia. Subsequently, the U.S. Supreme Court has granted cert. to hear the D.C. case.

Significantly however, Obama may have achieved a political resolution to this legal dispute, as the president has nominated two new NLRB appointees to replace those opposed by the Senate Republicans, namely union lawyer Richard Griffin and Deputy Labor Secretary Sharon Block, to be replaced by former AFL-CIO lawyer Nancy Schiffer and Kent Hirozawa. Obama has thereby (tactically) cleared the way for a confirmation vote next week and perhaps rendered the Supreme Court's appraisal moot.

Crucially, this was not the only controversy to preoccupy the Senate this week, as the appointment of Richard Cordray as director of the Consumer Financial Protection Bureau, was confirmed on Tuesday afternoon with a vote of 66 in favor and 34 opposed. Cordray's appointment too occurred during the questioned January recess of 2012. Moreover, a series of compromises are to proceed this week, as it is reported that Senate Republicans will allow votes to proceed for President Obama's top choices to run the Labor Department, Environmental Protection Agency, and Export-Import Bank of the United States.

Senate Majority Leader Harry Reid [D-Nev] said "I think we get what we want, they get what they want. Not a bad deal."

Please visit our past discussions on recess appointments for a history of the arguments that preceded this latest compromise.

King Richard - PointOfLaw Forum

British royal-watchers are eagerly awaiting the birth of their future queen or king, which is reportedly likely to happen sometime this week. It looks as if we beat them. The Senate voted today to confirm Richard Cordray to be director of the Bureau of Consumer Financial Protection. In taking that step, the Senate formally entrusted him with powers that would make many a king jealous. He has free reign during his five-year term to apply, enforce, and interpret a wide body of consumer law as he sees fit. Courts are directed to defer to his interpretation. How he chooses to interpret the law will affect the daily lives of many Americans, including whether they can get a mortgage and whether they will have access to banking services. His decisions also will play a large role in determining the prospects and profitability of providers of financial products. He presides over a half billion dollar budget, without having to ask permission from Congress before he spends the money or explain in detail how he spent it. He has broad powers to demand detailed information from banks and nonbanks. Concentrating this sort of power in one person sets a bad precedent for the future.

The Undirected CFPB - PointOfLaw Forum

Yesterday, Richard Cordray appeared before the Senate Banking Committee to present the Bureau of Consumer Financial Protection's semiannual report. His plans to appear before the House Financial Services Committee today ran into a roadblock--House Financial Services Committee Chairman Jeb Hensarling told him not to come. The letter of dis-invitation is premised on the fact that Mr. Cordray's status at the CFPB is under a legal cloud. That cloud is so big that not being permitted to testify is the least of Cordray's problems.

Last week, at her first Senate Banking Committee Hearing, Senator Elizabeth Warren excoriated regulators for entering into settlements with big banks rather than bringing them to trial. Also last week, Ms. Warren called for a vote to confirm Richard Cordray as director of the Consumer Financial Protection Bureau, a role in which he is already serving by virtue of a recess appointment of questionable legality.

Setting aside the senator's odd emphasis on trials as the only means to punish banks, the juxtaposition of these two events is interesting. On the one hand, Ms. Warren clearly relishes her new oversight role. On the other hand, she is insisting on the enshrinement of a regulator over whom she will not be able to exert effective oversight. If Mr. Cordray doesn't embrace the litigate-because-it-looks-tough approach--and so far he too has entered into settlements with big banks--there will be little she can do to hold him accountable besides public shaming. Under the institutional design blessed by Ms. Warren, the CFPB director has a free hand to do whatever he wants to do, even over the objections of members of Congress, the president, and the American people.

Today's NLRB Decision Casts a Shadow over the CFPB - PointOfLaw Forum

As Ted Frank pointed out earlier, today's decision by the D.C. Circuit Court of Appeals in Noel Canning v. National Labor Relations Board has far-reaching implications. The court, in the process of vacating a decision of the NLRB, found that the recess appointments of three of the NLRB's members were invalid. The NLRB's chairman issued a statement explaining that the order applies only to the particular case and expressing an intent to move forward with the NLRB's other matters. Despite his pledge to continue business as usual, the case has important implications for the full range of actions by the NLRB and the Consumer Financial Protection Bureau. Richard Cordray, the CFPB's director was recess appointed on the same day--January 4, 2012--and in the same manner as the three NLRB appointees. The Senate did not consent to Mr. Cordray's appointment and, in fact, many Senators voiced strong concern that, once in the job, the director would be unaccountable to anyone. Particularly because Dodd-Frank placed an extraordinary amount of power in the CFPB director, today's decision also calls into question the validity of the CFPB's actions. Neither the NLRB nor the CFPB should assume it is business as usual.

Senator-elect Warren's Quandary - PointOfLaw Forum

There has been a lot of speculation about whether Senator-elect Elizabeth Warren will get a seat on the Senate Banking Committee, a perfect forum to go after the financial industry. If Ms. Warren does get the coveted spot, she may have to reserve some of her ire for the Bureau of Consumer Financial Protection, the regulatory agency she helped create.

In her Congressional seat, Ms. Warren may find the Bureau's lack of accountability to Congress frustrating. The Bureau, as designed by Dodd-Frank, has wide latitude to set its budget and use it to further whatever goals the Bureau's sole director wishes to pursue. If the Bureau proceeds with its proposals to overrule statutory provisions it finds wanting, Congress may not even be able to constrain the Bureau by statute.

Even Ms. Warren's ability to ask questions at Senate hearings could be curbed by the Bureau's unwillingness to answer them. For example, Ms. Warren, representing the Bureau at a Congressional hearing in May 2011, told Subcommittee Chairman McHenry that he was "causing problems" by keeping her longer than the hour she had allotted for the hearing.

Perhaps as long as Mr. Cordray serves as director of the Bureau and Ms. Warren wields informal influence over the Bureau, she will be perfectly content to leave the agency officially unfettered by Congress. She may feel different when a new head of the Bureau--someone who takes an approach to consumer protection divergent from her own and does not take her phone calls--arrives on the scene and turns the Bureau in a direction she does not like. Anticipating such a scenario, Ms. Warren could, once she enters the Senate, join her many colleagues in calling for greater accountability for the Bureau.

Jarrett Dieterle
Legal Intern, Manhattan Institute's Center for Legal Policy

The Consumer Financial Protection Bureau (CFPB) was instituted by the Dodd-Frank Act in 2010 and has engendered concerns about whether it will be able to maintain its independence as a regulatory agency. As Manhattan Institute's director of the Center for Legal Policy Jim Copland has described previously, the CFPB - unlike most federal agencies - lacks Congressional oversight and is only accountable to the President. The CFPB faced further scrutiny after President Obama's controversial recess appointment of Richard Cordray to be its head.

Concerns about the CFPB's independence have increased in recent days after Patrick McHenry, a North Carolina Republican member of the House of Representatives, sent a letter to Cordray inquiring about the relationship between CFPB officials and the White House:

In a letter sent to consumer chief Richard Cordray Monday, Rep. McHenry asked for details on how the agency's top staffers interact with the White House, and why. "Although employees of other independent agencies meet with White House staff members and such meetings are not per se inappropriate, the frequency of the CFPB's visits and the CFPB's coordinated public events with the White House could suggest that the Bureau's regulatory actions are indirectly shaped by these interactions," the Congressman wrote.


A few examples, though circumstantial, raise eyebrows. In June Mr. Cordray briefed reporters in the White House--alongside presidential spokesman Jay Carney and Secretary of Education Arne Duncan--on student loans and rising tuition. President Obama has made his attempts to ease student debt burdens a centerpiece of his campaign. Public records show Mr. Cordray has also held calls with White House Deputy Chief of Staff for Policy, Nancy-Ann DeParle, and attended a "White House Cabinet Affairs Chief of Staff Lunch," though it's unclear why.

McHenry's letter itself may not lead to any disclosure regarding the CFPB's independence, but the relationship between the administration and the CFPB will be likely to face continued scrutiny.

Lawsuit challenges Dodd-Frank - PointOfLaw Forum

C. Boyden Gray spoke out nearly two years ago against the constitutionality of Dodd-Frank, and is now counsel of record (along with CEI) in a lawsuit putting those ideas into play, along with a challenge to the recess appointment of Richard Cordray. The lawsuit focuses on Titles 1 and 10, rather than the entire statute. Kudos to the State National Bank of Big Spring for sticking its neck along the line against an administration known to retaliate. [Gray/Purcell @ WSJ; more at CEI; American Banker; Powerline; WSJ ($); Bloomberg (with an ironic quote from Public Citizen attorney expressing skepticism over standing argument); Compliance Week; The Hill via Zieve; Reuters]

CFPB paternalism - PointOfLaw Forum

Paging Todd Zywicki. CFPB director Richard Cordray complains that 9% of bank customers pay 84% of overdraft fees, with the implication that paternalistic regulation is needed. Of course, as Shannon Phillips points out (via Funnell), what this statistic really reflects is that the vast majority of account holders use their accounts responsibly: if someone in that 9% were to do a better job of balancing their checkbook, they'd move into the 91%. But CPFB regulation (still in a notice and comment procedure, with comments due by June 29), would likely punish the 91% to protect the 9% from themselves. Except that without the overdraft fees, banks will find it unprofitable to serve these customers in the first place, and will instead charge monthly fees that effectively preclude any access to the banking system for both the responsible and irresponsible lower middle class. But at least regulators can feel better that they stopped overdraft fees.

Similarly, Jeff Sovern complains that many consumers and students are cluelessly engaging in complex financial transactions without understanding basic concepts like variable and fixed interest rates. The proposed solution—required use of mortgage counselors—would make mortgages more expensive for everyone, even those responsible citizens who are capable of representing their own interests and making their own choices without the needless additional overhead. Why not let consumers choose for themselves whether they need to hire a financial advisor?

Part of the problem in the mortgage context, I would strongly suspect, is the degree to which meaningful disclosures are buried in meaningless defensive disclosures banks engage in upon risk of class action liability. To take a related example, the pending Supreme Court case of First American Financial Corp. v. Edwards involves a RESPA class action alleging a technical violation of the law without any financial injury; while this is not a disclosure case, it shows the degree to which banks face litigation exposure by entrepreneurial rent-seeking trial lawyers without regard to whether the alleged transaction problem actually harms consumers. The disclosure regime has grown to the extent that it has become counterproductive: even brilliant experienced federal judges find it unprofitable to read the disclosures. Where CFPB could be useful is to create a clear-cut disclosure regime—a page of disclosures—together with preemption precluding lawsuits over the lack of the other 100 pages of disclosures. Earlier.

The rest of the story behind Obama's recess appointments - PointOfLaw Columns

Jim Copland

Published on 01/18/12

By now, others have well documented the extraordinary nature of President Obama's appointments to fill the National Labor Relations Board and head the new Consumer Financial Protection Bureau -- purportedly exercising authority under the Constitution's Recess Appointments Clause, but almost certainly acting outside the constitutional provision's scope.

But beyond the constitutional issues, the political and policy implications of the president's action has drawn insufficient attention. The president has, in an election year and without congressional oversight, assumed sweeping and virtually unilateral authority to make policy that will generate windfalls for his two most financially crucial campaign constituencies -- organized labor and the plaintiffs' bar. Just how important are trial lawyers and labor unions to the president's election? In the 2008 election, lawyers and law firms funneled over $45 million into Obama's campaign, more than twice as much as any other industry.

The Service Employees International Union spent over $31 million in independent expenditures to aid the president's campaign -- again, more than twice as much as any other outside group.

The organized plaintiffs' bar and various labor unions constituted a staggering 19 of the top 20 political-action committees' spending on behalf of Democrats in the 2008 campaign, doling out between $1.7 million and $3.2 million each.

Since assuming office, Obama has worked to repay these campaign benefactors. The auto-company bailouts propped up unions by undercutting the clear legal rights of secured debt holders, and much of the "stimulus" spending was designed to protect public-sector unions by shielding them from budget cuts made by strapped state and local governments.

Trial lawyers avoided any serious tort reform in Obamacare, and they got legislation that gutted statutes of limitation for employment-discrimination lawsuits and expanded the scope of private litigation against government contractors.

That said, Congress has frustrated the president's most ambitious plans to help labor and lawyers. Even with large majorities in both houses of Congress, Obama was unable to muster support for the Employee Free Choice Act -- the deceptively labeled "card check" bill that would have allowed unions to form without secret-ballot elections and empowered federal bureaucrats to make sweeping changes to private labor contracts.

Similarly, the most sweeping reform bills on the tort bar's wish list also never came to pass, including legislation designed to make it easier to file baseless claims in federal court; a bill to expand securities litigation by allowing lawyers to sue customers and suppliers for companies' alleged frauds; and a trial-lawyer tax break that would have allowed plaintiffs' lawyers to treat contingency-fee loans as immediate expenses.

With his recess appointments, however, Obama is now in a position to avoid such congressional obstacles and help unions and lawyers through fiat. With three of the five NLRB members slipped into power in the dead of night -- and two of these three were nominated only two days before the Senate's Christmas break, hardly stalled by congressional inaction -- the president's labor-friendly cronies will be well-positioned to make rulings advantageous to unions.

Expect to see more along the lines of the Obama NLRB's extraordinary effort to thwart a Boeing plant's construction in right-to-work South Carolina. As CFPB director, Cordray will be positioned to green-light state tort litigation previously blocked by federal regulation and to "delegate" enforcement to state attorneys general, who in turn will farm out lawsuits to the plaintiffs' bar.

Cordray himself leveraged the Ohio state attorney general's office into a powerful campaign fundraising mechanism, when his election pulled in over $800,000 from out-of-state plaintiffs' law firms and he then hired many of those same firms to sue on the state's behalf.

The president's NLRB and CFPB appointments should be understood not only as an affront to the Constitution's system of checks and balances, but also as an aggressive move to energize his deepest-pocket electoral supporters. Sadly, American law and policy will be the likely casualty of this Chicago-style campaign gambit.


New Featured Discussion: Recess appointments - PointOfLaw Forum

Brooklyn Law professor Jason Mazzone and Heritage Foundation visiting legal fellow Andrew Grossman debate the constitutionality of President Obama's recess appointment of CFPB director Richard Cordray and three members of the NLRB.

Professor Mazzone's first comment articulates a unique national security argument in defense of the President's recess appointment authority. The featured discussion promises to be lively and thoughtful; please check back throughout the week as the discussion continues.

Recess Appointments and National Security - PointOfLaw Featured Discussion

Jason Mazzone
Gerald Baylin Professor of Law, Brooklyn Law School

Earlier this month, President Obama, invoking his power to make recess appointments, named Richard Cordray director of the Consumer Financial Protection Bureau and added three members to the National Labor Relations Board. Critics contend that these appointments were unconstitutional because the Senate was not in recess: although virtually all Senators were out of town and no business was being conducted, the chamber was kept open through pro-forma sessions.

I am no fan of recess appointments particularly when, as here, they are used to put into office nominees the Senate has had before it but has refused to advance to a vote. Nonetheless, the President was on solid constitutional ground when he determined that not withstanding the pro-forma sessions, he could make use of his appointment power. To see why requires shifting the focus from the CFPB and the NLRB and onto the bigger stakes.

The Constitution is a document for times of war as well as times of peace. Many of the Constitution's provisions are explicitly directed at matters of national security; many other provisions serve a security function. The President's "Power to fill up all Vacancies that may happen during the Recess of the Senate" is a power that plays an important national security role by ensuring that even in times of war or other national crises high-level governmental offices remain staffed and functional. The power is located in section 2 of Article II of the Constitution, along with other presidential powers (to act as Commander in Chief, to make Treaties, to appoint Ambassadors, public Ministers and Consuls) that secure the nation. Early interpreters of the power emphasized its security role. For example, in 1823, Attorney General William Wirt, invoking military analogies, explained that were the President dependent upon the resumption of the Senate, a vacancy could "paralyze a whole line of action in some essential branch of our internal police."

Allowing the Senate to block presidential use of the appointment power with pro-forma sessions (the equivalent of an "In Session" sign on the door of a vacant chamber) would have grave security implications. In assessing President Obama's recent use of the power, we should ask about the scenario that is at the heart of the Recess Appointments Clause.

Consider this: While most Senators are in their home states, terrorists attack Washington, DC, with a dirty bomb. Cabinet officials and heads of federal agencies charged with the response effort are killed. A lone Senator bangs the gavel in an otherwise empty chamber and calls the body into pro-forma session. It would be foolish to say that the Senate has not recessed and thus the Constitution prohibits the President from replacing dead and wounded federal officers.

To be sure, the security of the nation does not depend upon staffing the CFPB and the NLRB. But the President's recess appointment power extends to filling "all Vacancies." And, as with other constitutional provisions, it is a mistake, and a danger, to measure that power by judging its perceived necessity in times of peace.


James R. Copland

On January 4, President Obama invoked executive recess appointment authority to place former Ohio attorney general Richard Cordray as the first director of the new Consumer Financial Protection Bureau, as well as to place three new members of the National Labor Relations Board. Senate Republicans had previously refused to permit a confirmation vote on Cordray and one of the president's NLRB appointments.

The president's action was controversial because the Senate was technically not in recess -- having held "pro forma" sessions that appeared to prevent the President from exercising his constitutional recess appointment authority. White House lawyers advised the president that he had the constitutional authority to make recess appointments while the Senate is hosting "pro forma" sessions only for the purpose of blocking those appointments. The Department of Justice defended the legal authority of the President in a memorandum.

Various legal scholars in turn reacted to the president's action: Professors John Yoo and Laurence Tribe, on opposite sides of the issue, examined the scope of executive authority and congressional authority under a separation of powers framework; and Professor Richard Epstein looked to the text of the Recess Appointment Clause and challenged not just President Obama's appointments but the current practice of recess appointments more broadly.

This week on Point of Law, we are fortunate enough to host a lively back-and-forth discussion with Jason Mazzone, Gerald Baylin Professor of Law at Brooklyn Law School and Andrew M. Grossman, visiting legal fellow in The Heritage Foundation's Center for Legal and Judicial Studies and litigator at Baker & Hostetler. Mr. Mazzone and Mr. Grossman will explore the constitutionality of the president's controversial recess appointments, exploring legal arguments that have been advanced in the debate and others not yet expressed. The featured discussion will be available below; please check back throughout the week as the discussion continues.

Legitimacy of Cordray confirmation under the microscope - PointOfLaw Forum

On December 8, 2011, after Senate Republicans blocked the confirmation of Richard Cordray, former Ohio attorney general nominated to serve as the first director of the Consumer Financial Protection Bureau, President Obama vowed that his administration would not give up on the appointment. On Wednesday, the President followed through on his pledge with a recess appointment of Cordray, officially expanding the authority of the CFPB over non-bank institutions/lenders that can offer loans to consumers.

While there was an expected partisan response to the President's strategy from both sides of the aisle, a serious and legitimate legal issue was identified by constitutional scholars. The issue is whether the President has the authority to make recess appointments while the Senate is hosting "pro forma" sessions for the purpose of blocking those appointments.

The White House argues that the President does indeed have such authority:

The Constitution gives the President the authority to make temporary recess appointments to fill vacant positions when the Senate is in recess, a power all recent Presidents have exercised. The Senate has effectively been in recess for weeks, and is expected to remain in recess for weeks. In an overt attempt to prevent the President from exercising his authority during this period, Republican Senators insisted on using a gimmick called "pro forma" sessions, which are sessions during which no Senate business is conducted and instead one or two Senators simply gavel in and out of session in a matter of seconds. But gimmicks do not override the President's constitutional authority to make appointments to keep the government running. Legal experts agree. In fact, the lawyers who advised President Bush on recess appointments wrote that the Senate cannot use sham "pro forma" sessions to prevent the President from exercising a constitutional power.

In response, Andrew Grossman, visiting legal fellow in The Heritage Foundation's Center for Legal and Judicial Studies and litigator at Baker & Hostetler, points to contradictions that could occur as a result of executive authority in deciding whether the Senate is functionally in session or not.

...on December 17, the Senate agreed to an order instituting "pro forma" sessions, of the kind the President now claims are actually recess. (See the PDF of the Congressional Record here.) But it was at one of those sessions, on December 23, that the Senate passed the payroll tax cut extension that the President signed into law later that day. (Again, see the Congressional Record entry.)


Of course, if the Senate was actually on recess that day, it couldn't have passed the bill, and the President couldn't have signed it into law. (The President has not claimed--at least, not yet--that he can enact laws that have not passed Congress.) But in that case, the President chose to respect the Senate's own view as to whether it was open for business.


As Andrew also notes, the Constitution vests the Senate with the express authority to "determine the rules of its proceedings."

Professor Richard Epstein and Professor John Yoo both identify the danger in the recognition of executive authority to determine whether the Senate is in session. Professor Epstein then articulates a strong textual argument in the interpretation of Article II, Section 2 of the Constitution concluding that Cordray's confirmation does not fall within the scope of the President's recess appointment authority. The U.S. Chamber of Commerce echoed that sentiment in their sharp admonition of the President's recess appointment calling it "unprecedented, constitutionally questionable, and puts the authority of the director and the validity of the bureau's work in legal jeopardy."

Among the many viewpoints expressed, we can probably all agree that this appointment is not likely to go unchallenged.


In an interview with Jim Blasingame of The Small Business Advocate radio program, Jim Copland, director of Manhattan Institute's Center for Legal Policy, addressed the Consumer Financial Protection Bureau in light of the Senate's recent rejection of an up-or-down vote for Richard Cordray's confirmation as the director of the CFPB.

In one of several segments, Jim tackled the question, "How will the CFPB affect small business? He replied:

Credit has really dried up for small businesses. This is really the lifeline for small business; small banks making small loans to small businesses to go and invest. Of course, some of these small businesses are going to keep going, individuals will take out their personal credit lines, their credit cards. People running small businesses will find ways to get credit. But, the unavailability of low-cost credit for small businesses is one of the biggest, if not the biggest, problem right now in the economy.

The concern the Republicans have is that this bureau, while in concept defensible, was written into this law where there is basically no check on the power of the person running the bureau.

...And this person can effectively make unilateral decisions. No question that person is going think that these are intended to help consumers, but, they also might have massive implications for the broader economy, the ability to generate credit and the ability to generate financing mechanisms. This could have dramatic ripple through effects on the broader economy.

So I think that their concerns are well founded and what they're basically saying is, before we take one of these up for a vote, we've got to restructure this so that it is structured more like most of these federal agencies. Where there is some congressional oversight, some sort of bi-partisan commission, something so that you don't have one individual acting basically as a czar for the country's consumer finance because that's very, very dangerous if you get the wrong person in there. And I'd argue that Richard Cordray is exactly the person you have to worry about.

Jim wrote an op-ed piece published in the Washington Examiner on this topic months before the rejection of Cordray's confirmation, expressing similar views with a focus on Cordray's record as Ohio's Attorney General.

Cordray Blocked: Obama vows he won't give up - PointOfLaw Forum

PointofLaw returns to its coverage of the Richard Cordray confirmation standoff. In a 53-45 vote, Senate Republicans effectively blocked the confirmation of Richard Cordray, former Ohio attorney general, nominated to serve as the first director of the Consumer Financial Protection Bureau. While the CFPB can currently regulate the nation's banks, without a director, the new agency cannot assume its arguably most important role of regulating non-bank institutions that can offer loans to consumers.

In a subsequent press conference, President Obama pledged that this was not the end of the road and that, "we are not giving up on this... we are going to keep at it." Some Senate Democrats are urging the President to make a recess appointment of Cordray when the Senate adjourns as expected at the end of the month. The President has not ruled that option out. Republicans however, can avert such appointments by preventing the Senate from adjourning and holding short sessions during the vacation periods. Such a stalemate, we would hope, will force the Senate to engage in a real and honest debate focused on the structure and regulatory authority of the CFPB.

In the meantime, both parties will appeal to the public by accusing each other of unprecedented partisanship; the Senate Democrats pointing to the first time in Senate history that a candidate of an agency has been blocked because of opposition to the agency itself and Senate Republicans citing an unparalleled grant of absolute unchecked authority to a regulatory agency.

Neither party has questioned Cordray's qualifications which are at issue in Jim Copland's op-ed in the Washington Examiner and Manhattan Institute's Trial Lawyers Inc.: Attorneys General report.

Since it first opened its doors in July, the Consumer Financial Protection Bureau has been unable to exercise its full authority as promulgated under Dodd-Frank. Without a confirmed director, the CFPB cannot extend its oversight to non-bank consumer lenders, arguably the most essential to its intended role.

The White House's greatest obstacle has been trying to convince a block of 44 Senate Republicans who have written a letter pledging to filibuster the confirmation of Obama's nominee, former Ohio Attorney General, Richard Cordray. Despite Cordray's alarming record as Ohio's AG, more specifically his contracts with private attorneys on a contingency-fee basis to handle the state's lawsuits, Senate Republicans refuse to confirm Cordray because of concerns about the CFPB's leadership structure, authority and funding.

In response, the Obama administration has decided to take its message to the people via media, public appearances and an information campaign targeting seven states in particular: Alaska, Indiana, Iowa, Maine, Nevada, Tennessee and Utah. The goal is to lobby the Senators deemed most likely to change their minds by encouraging public pressure from constituents.

Simultaneously, state AGs and other officials have already joined the effort to gain the 60 votes necessary for a vote that may come as early as Thursday. Even Republican Attorney General Mark Shurtleff of Utah has come forward to support Cordray in this effort.

Coincidentally, both Democrat Cordray and Republican Shurtleff are among the eight "leaders" of state AGs recognized for their unsavory alliances with trial lawyers. The White House seeks to frame this confirmation debate as a choice between either protecting the financial industry or the middle class however, Cordray's record as Ohio's AG and the broad authority delegated to the CFPB director and State AGs by Dodd-Frank may paint a different picture.

Cordray Confirmation Stalemate Continues to 'Handicap' CFPB - PointOfLaw Forum

The Consumer Financial Protection Bureau, the highly controversial centerpiece of the Dodd-Frank Wall Street Reform and Consumer Protection Act, is still struggling to assume its full regulatory authority. Without a confirmed director, the CFPB cannot extend its oversight to non-bank consumer lenders.

In response to criticism for withholding their confirmation, Republicans insist that "...the objection isn't to any particular nominee. Rather, the concern is with the lack of transparency and accountability at the CFPB."

In this case however, an objection to the particular nominee Richard Cordray may be warranted. Trial Lawyers Inc.: Attorneys General, a new report released by Manhattan Institute's Center for Legal Policy, identifies Cordray among the greatest allies to the plaintiffs' bar while serving as Ohio's Attorney General. In a separate article, James Copland, the author of this report and director of the Center for Legal Policy, cites $830,000 that Cordray received from out-of-state plaintiffs' firms while during his term parceling out at least six lawsuits on a contingency-fee basis.

Those Senate Republicans critical of the potentially broad and vague authority of the CFPB as evidenced by its 802 page regulatory manual would be justified in objecting to the appointment of a nominee with Cordray's record. The CFPB might very well be in need of reforms to its leadership structure, transparency and general authority, but, the unsuitability of a nominee for the director position is at the very least relevant to making the case for withholding a confirmation to that nominee.

In the meantime, the CFPB has certainly ramped up its efforts to convince the public and legislators of the severity of the gridlock in the Senate. Political opponents and critics however, seem to be unwilling to comply with the administration until their concerns are addressed.

Cordray suit against ratings agencies thrown out - PointOfLaw Forum

State AGs often use the power of their office and bad publicity to mau-mau defendants in meritless suits; perhaps that was the plan of then-Ohio AG Richard Cordray when he sued ratings agencies for violations of the Ohio Securities Act, though the ratings agencies were not sellers of securities as the act requires. A federal district court judge threw out the case this week, nothing that the "complaint identifies who the issuers of the securities were, but it does not contain even a general allegation that the issuers violated the Ohio Securities Act, let alone plead a violation with particularity." The law firms bringing the suit on behalf of Ohio were indirect donors to Cordray's campaign. [LNL]

As J.W. Verret and Michael Krauss point out in separate articles, part of the problem with the Consumer Financial Protection Bureau is that it is run by a single czar; when the SEC or NLRB exceed their authority for partisan political gain, the minority members of the commission can speak out and draw attention to the abuses. That can't happen when the decisions are made by a single individual. Krauss argues against the nomination of Cordray because of his ties to the trial bar. [Krauss @ American Thinker; Verret @ WaTi] Dodd-Frank is already vague and overbroad; if the CPFB can bring the sort of abusive lawsuits that the Ohio AG's office did, it will be problematic.

Update, October 20: see also IBD.

A trivia note - PointOfLaw Forum

A: This nominee to head the CPFB was one of the attorneys representing Morgan Stanley on the successful cert petition in Credit Suisse v. Billing.

Q: Who is Richard Cordray?

2