January 5, 2012
By ramming through a recess appointment of Richard Cordray to head the new consumer financial protection agency over the threat of retaliation by Senate Republicans, President Obama was telling his political and industry critics to “bring it on.”
There was virtually no dispute that Cordray, the former Ohio state attorney general who has been serving as the acting head of the consumer agency until the Senate acted on his nomination, was a first-rate choice for the post. Cordray has a solid record of achievement in looking out for consumers in Ohio, and his nomination has won strong backing from both Republican and Democratic attorneys general throughout the country.
But Cordray, like Elizabeth Warren before him, was caught up in a larger battle between the administration and Republican and financial industry leaders over the design of the consumer agency under the Dodd-Frank financial overhaul legislation.
Republicans contend the director of the new agency is too powerful, and are demanding a revision in the law to place the agency under the control of a five-member board that depends on Congress for its funding. Currently the agency gets its funding through the Federal Reserve, which gives it more independence from congressional influence. Senate Republican Leader Mitch McConnell of Kentucky and other Republicans had vowed to block confirmation of Cordray’s nomination until the president agreed to major changes in the law.
Obama delivered his response to the GOP in Ohio on Wednesday, by announcing that he had bypassed the Senate and installed Cordray as director of the new agency. Obama declared that it was essential to protect the interests of middle-class Americans who have suffered from a Great Recession triggered in part by the excesses and abuses of the financial industry.
“I will not stand by while a minority in the Senate puts party ideology ahead of the people they were elected to serve,” Obama told an enthusiastic crowd in Shaker Heights, a suburb of Cordray’s home town of Cleveland. “Not when so much is at stake. Not at this make-or-break moment for middle-class Americans.”
McConnell said in a statement that Obama “has arrogantly circumvented the American people,” and he called the tactic of using a recess appointment “uncertain legal territory.” While Democratic and Republican presidents down through the years have temporarily installed officials in high posts while the Senate was in recess to break filibusters, the Republicans forced the Democratic-controlled Senate to remain in pro forma session throughout the extended congressional recess.
McConnell contends that the president’s action “threatens” the confirmation process and fundamentally endangers the Congress’s role in providing a check on the excess of the executive branch.” Former senator Rick Santorum of Pennsylvania, campaigning today in New Hampshire for the Republican presidential nomination, assailed Obama for the recess appointment.
But Obama and his advisers are more than willing to risk a legal challenge or political backlash. The president happily turned yesterday’s announcement into another reelection campaign event,in which he pitted himself against congressional Republicans. Essentially, he argued that he is more concerned about the plight of the middle class than congressional Republicans and their allies in the financial sector.
“I refuse to take ‘no’ for an answer,” he told the cheering crowd of 1,300 at a high school. “I am not going to stand by while a minority in the Senate puts party ideology ahead of the people we were elected to serve.”
Obama’s original choice for the consumer financial protection bureau was Elizabeth Warren, the liberal Harvard law school professor and consumer advocate who first recommended creation of the agency. She spent the better part of last year helping to set up and staff the agency to protect Americans against abuses by banks, credit card companies and other financial institutions. But Warren had many enemies on Capitol Hill and in the financial sector, and when it became apparent she could never win Senate confirmation, Obama last July switched to Cordray, her deputy, as his choice to head the agency.
Warren is now back in Massachusetts, seeking the Democratic nomination to challenge Republican Sen. Scott P. Brown, who won the late senator Edward M. Kennedy’s seat in a special election. Brown, facing a tough reelection battle in the heavily Democratic state, yesterday endorsed Obama’s appointment of Cordray.
Cordray attended the University of Chicago Law School and clerked for two Supreme Court justices, Byron R. White and Anthony Kennedy. He spent more than a decade in the law firm of Kirkland & Ellis, a major donor to Democratic candidates. During his two years as Ohio’s attorney general, he launched a number of high-profile lawsuits to recover money for wronged investors.