Senate Republicans challenge legitimacy of Obama’s consumer bureau chief

Senate Republicans stared down President Obama’s appointee to the Consumer Financial Protection Bureau (CFPB) on Tuesday and all but declared him illegitimate.

Appearing before the Senate for the first time since his controversial recess appointment in January, CFPB Director Richard Cordray got an earful from Republicans still fuming about Obama’s decision.

“If we accept the premise of your validity in this position, then … our ability to offer advice and consent basically disappears,” said Sen. Mike Johanns (R-Neb.), who went through the nomination process to become Agriculture secretary under President George W. Bush. 

“I don’t know how anyone could maintain at this point that your appointment and your service in this position is valid,” Johanns said. 

Four Republicans on the panel refused to attend the hearing, arguing that to do so would legitimize an invalid appointment.

“The president violated the Constitution and usurped the responsibility of the Senate to provide advice and consent, and Sen. Toomey does not want to lend legitimacy to an illegitimate appointment,” said a spokesman for Sen. Pat Toomey (R-Pa.), who skipped the hearing.

Sens. Jim DeMint (R-S.C.), David Vitter (R-La.) and Roger Wicker (R-Miss.) also refused to attend the hearing. 

Republicans say Obama upturned nearly a century of precedent by ignoring the Senate’s pro forma sessions to put Cordray in place. The White House maintains those sessions, which last just a few seconds, do not prevent the president from making recess appointments. 

Several Republicans said the Supreme Court might have to settle whether Cordray’s appointment to the CFBP was a legal use of executive authority.  

“I suspect that the Supreme Court will ultimately decide the constitutionality of the president’s action,” said Sen. Richard Shelby (R-Ala.), the committee’s ranking member.

Shelby said he expects a business or industry group affected by the consumer bureau’s work to challenge Cordray’s authority in court. 

As he has in the past, Cordray refused to entertain suggestions that his days as director of the CFPB are numbered.  

“I have been appointed as director,” he said. “I now have legal obligations I’m supposed to carry out for this bureau. I’m going to do that.”

The Senate session was a marked contrast to a hearing of the House Oversight Committee last week, where Cordray struck a conciliatory tone and Republicans responded in kind. Senate Republicans had little time for niceties and accused Cordray’s consumer bureau of saying one thing but doing another. 

“I’m concerned that you’ve already developed a propensity for how to use technicalities to achieve your own goals,” said Shelby.

After the hearing, the ranking member was more pointed.

“Talk is cheap,” he told reporters.

Shelby criticized Cordray for failing to convene any small-business panels at the CFPB before finalizing a rule that asset new requirements for money transferred overseas — even though the law requires such panels before rules are proposed.

Cordray defended the regulatory action, saying the proposal came from the Federal Reserve and was only finalized by the CFPB after it began work in July. He said the panels would be used in the future. 

He maintained that the CFPB did not want to be a burden, in particular to community banks and credit unions, which he said had “nothing really to do” with the financial crisis. 

As Republicans pressed Cordray on a number of fronts, Democrats tried to move past the appointment controversy to discuss the CFPB’s work.

“I just simply can’t believe we’re still having this debate,” said Sen. Sherrod Brown (D-Ohio). “We know the other side is simply doing the bidding of Wall Street, that’s what they’ve always done.”

— This story was updated at 2:00 p.m.