Obama defies Senate, appointing consumer, labor officials

McClatchy NewspapersJanuary 4, 2012 

WASHINGTON — A defiant President Barack Obama sidestepped Congress on Wednesday and appointed a new consumer watchdog, locking horns with Republicans, who immediately accused the president of exceeding his authority to appoint a director to an agency they oppose.

Speaking at a high school in the election battleground state of Ohio with his nominee for the Consumer Financial Protection Bureau by his side, Obama struck a populist tone and blamed congressional Republicans for stalling the appointment of former Ohio Attorney General Richard Cordray as “America’s consumer watchdog.”

“I’ve got an obligation to act on behalf of the American people,” the president said. “And I’m not going to stand by while a minority in the Senate puts party ideology ahead of the people that we were elected to serve.”

Hours later, the White House announced that Obama also had appointed three members to the National Labor Relations Board, in defiance of Senate Republicans.

In Ohio, the president noted that he'd nominated Cordray last summer to serve as a beat cop against deceptive, abusive and predatory loan products in the financial marketplace, but that Senate Republicans had blocked the appointment, not because Cordray was unqualified, but because “they don’t agree with the law that set up a consumer watchdog in the first place,” he said. Senate Republicans have made clear that is, indeed, their motive.

“They want to weaken the law. They want to water it down,” Obama said, adding that, “by the way, a lot of folks in the financial industry have poured millions of dollars to try to water it down.”

Senate Republicans blocked a confirmation vote on Cordray last month and Senate Republican leader Mitch McConnell of Kentucky accused Obama on Wednesday of making an unprecedented appointment, because the Senate isn't in official recess. Traditionally, McConnell said, presidents make such appointments only when the Senate is in recess for 10 days or longer.

Obama has “arrogantly circumvented the American people,” McConnell said, adding that the move “lands this appointee in uncertain legal territory, threatens the confirmation process and fundamentally endangers the Congress’ role in providing a check on the excesses of the executive branch.”

He said that Republicans wanted structural changes to the agency, which was “subject to none of the checks that independent agencies normally operate under.”

White House Communications Director Dan Pfeiffer accused Senate Republicans of coming up with a “gimmick” to prevent the president from exercising his recess appointment authority: being out of town for weeks but convening every few days in a “pro forma” session.

Sarah Binder, a senior fellow at the Brookings Institution, a center-left policy-research center, said the Constitution “doesn’t define what constitutes a valid recess for the purpose of the president’s proper exercise of the recess appointment power, leaving it open to interpretation.”

She said that in the most recent court case on the matter _ when the late Sen. Edward Kennedy, D-Mass., challenged the recess appointment of William Pryor to an appeals court by President George W. Bush _ the administration’s right to make a recess appointment on the seventh day of a 10-day intra-session recess was upheld.

The back and forth over Cordray underscores the partisan fighting that's characterized every development of the new consumer protection bureau, the most tangible government response to the nation's 2008 economic meltdown.

And it signals Obama’s intent to position himself for his re-election campaign as what administration officials have dubbed a “warrior for the middle class.” The president delivered the opening salvo in Kansas last month, outlining a populist message to appeal to independent and middle-class voters.

After failing last month to get the 60 votes needed for a straight up-or-down Senate confirmation vote on Cordray, Obama hinted that he might use a recess appointment to bypass the GOP filibuster that's left the new agency without a director since its regulatory authority began in July.

At the time, the president also voiced frustration over GOP efforts to delay his many other nominations, including federal judges and assistant treasury secretaries. Senate Republicans also have blocked appointments to the National Labor Relations Board; Obama appointed three members Wednesday.

The NLRB appointments allow the board to decide cases again. That authority was lost earlier this week when the five-member panel was down to only two members and was unable to field a quorum.

Kimberly Freeman Brown, the executive director of American Rights at Work, commended the president’s NLRB appointments.

“Without a functioning board, employers and employees alike would have been stuck in legal limbo on a range of critical issues, including the rights of certain workers to form unions and the appropriate use of social media to discuss workplace concerns,” Brown said.

Created by the 2010 Dodd-Frank financial overhaul law, the Consumer Financial Protection Bureau monitors deceptive, abusive and predatory loan products in the financial marketplace.

A division of the Federal Reserve, the bureau works as a stand-alone agency to make sure consumers understand the terms of loan products by reducing fine print, simplifying forms and helping to illuminate costly penalties and fees that often are hidden.

Senate Republicans see the bureau as a vast overreach of government authority and have blocked any nominee for director until the agency's structure is revamped. Without a director, the bureau could examine and oversee large banks, but it couldn't oversee non-depository institutions such as mortgage companies, payday lenders and credit bureaus.

The U.S. Chamber of Commerce decried Obama’s move as “unprecedented, constitutionally questionable” and said it put the authority of the director and the bureau’s work “in legal jeopardy.”

With Cordray installed, the bureau assumes its full regulatory authority.

"Until now, the CFPB has been fighting mounting consumer financial abuses with one arm tied behind its back," said Travis Plunkett, the legislative director at the Consumer Financial Protection Bureau.

Before making the announcement Wednesday, Obama and Cordray sat around a dining room table with an elderly Cleveland couple who'd nearly lost their home after being fleeced by a mortgage broker, according to the president.

The president pointed to William and Endia Eason’s troubles as an example of the “trickery and abuse” that Cordray will address to “make sure that families like the Easons … (are) not taken advantage of and they’re able to live in security and dignity in their golden years.”


For more McClatchy politics coverage visit Planet Washington Senate Republicans block Obama nominee to head consumer finance agency

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