The Consumer Financial Protection Bureau (CFPB) is not known for its brevity, but Richard Cordray only needed seventeen lines of space in the Federal Register to ratify the actions he took as the bureau’s leader in the period between his controversial recess appointment and his recent Senate confirmation.
“I believe that the actions I took during the period I was serving as a recess appointee were legally authorized and entirely proper,” Cordray wrote in the release published on Aug. 30. “To avoid any possible uncertainty, however, I hereby affirm and ratify any and all actions I took during that period.”
President Barack Obama’s decision to recess appoint Cordray and three National Labor Relations Board (NLRB) nominees while lawmakers were on break in January 2012 touched off a firestorm of controversy. When a federal court later ruled that the NLRB appointments were invalid, court watchers, Republican lawmakers and industry participants speculated that Cordray’s confirmation and the CFPB’s actions under his leadership could be in jeopardy.
Obama renominated Cordray to continue leading the bureau earlier this year, but Senate Republicans vowed to block a confirmation vote unless Democrats agreed to change the bureau’s leadership structure and funding mechanism. Despite the heated rhetoric and outstanding constitutional issues, Republicans eventually backed down, and Cordray was confirmed by the Senate on July 16 as part of a larger deal permitting several nominations to move forward.
Following the vote, Richard Andreano, a partner at Ballard Spahr LLP, told Dodd Frank Update that Senate confirmation would likely serve to quell concerns regarding the CFPB’s regulatory and supervisory operations under Cordray’s leadership, despite outstanding constitutional challenges. He also predicted that Cordray would move to ratify is prior actions. Ratification may not resolve all possible legal issues. However, Andreano predicted that any such issues will likely be “theoretical and never tested.”
He also said it’s unlikely that the mortgage industry would try to raise any legal issue that would place the bureau’s rules in jeopardy.
“While there are some aspects of the rules they don’t like, if you’re talking about all of the rules or none of the rules; they’ll take all of the rules,” he said.
View the CFPB’s Federal Register notice
Read more about Cordray’s confirmation and its implications in the August edition of Dodd Frank Update