Obama Considering Cordray Recess Appointment

President Barack Obama and his advisers are debating whether to install Richard Cordray as head of the Consumer Financial Protection Bureau as soon as today, challenging Republican efforts to block appointments while Congress is away from the Capitol, according to two people familiar with the matter.

White House officials recognize that appointing Cordray would probably invite a court battle with congressional Republicans during an election year, said the people, who asked not to be identified because they aren’t authorized to speak publicly.

White House officials have communicated to Cordray that he should be ready to become acting consumer bureau head as soon as today, according to one person. A final decision on the recess appointment hasn’t been made, the other person said. Jay Carney, the White House press secretary, declined to comment.

Cordray is the former attorney general of Ohio, and Obama is scheduled to deliver a speech on the economy today in a suburb of Cleveland.

The Constitution gives a president the power to make appointments when the U.S. Senate is in recess. To keep Obama from appointing officials after Congress started a holiday break last month, congressional Republicans refused to adopt a resolution to formally adjourn and senators have appeared every three days for a brief pro forma session.

The Congressional Research Service, in a 2001 memo, said congressional practice and Justice Department opinions have backed the position that the Senate should be out of session for more than three days before the president can make a so-called recess appointment.

Recess Appointments

The White House discussions center on whether to challenge that customary practice and go ahead with an appointment while most lawmakers are out of town, despite the Senate’s pro forma gathering.

Enough questions surround the way congressional recesses work to give the Obama administration some grounds to attempt a legal fight, said Norm Ornstein, a congressional scholar at the American Enterprise Institute in Washington.

“The fact is that there is significant ambiguity about how you define a recess that they could challenge it,” Ornstein said.

Obama nominated Cordray to be the bureau’s first director in July, almost one year after enactment of the Dodd-Frank financial regulatory law that created the agency. Obama passed over Elizabeth Warren, the Harvard University professor who set up the bureau and is running for the U.S. Senate from Massachusetts.

Fight Over Bureau

Even before Cordray received the nod, the bureau became ensnared in a partisan fight over demands by Senate Republicans for changes in the agency’s structure and funding. In May, 44 Republicans -- a 45th later joined them -- said they wouldn’t confirm a director without the changes, and on Dec. 8 they blocked the nomination on a procedural vote.

Without a director in place, the consumer bureau can’t supervise and regulate non-bank financial firms, such as mortgage originators and payday lenders. On July 21, it acquired the authority to supervise and regulate deposit-taking banks.

A recess appointment would heighten a clash between Obama and Congress, including December’s showdown over a two-month extension of a payroll tax (FFSTEMPL) cut for workers. Obama will need Congress to pass a full-year extension, which is “essentially the last must-do item of business on the president’s congressional agenda” in 2012, White House spokesman Josh Earnest said on Dec. 31.

Congressional Cooperation

The president also may need Congress’s cooperation on pending nominations to the Federal Reserve Board and judgeships and on his proposals in a jobs bill.

The Senate is scheduled to stay symbolically open for business until lawmakers resume work on Jan. 23.

Adam Jentleson, a spokesman for Senate Majority Leader Harry Reid, a Nevada Democrat, declined to comment.

Don Stewart, a spokesman for Senate Minority Leader Mitch McConnell of Kentucky, said he couldn’t speculate about how the White House might attempt to execute the appointment. He said it doesn’t appear possible when the Senate is holding pro forma sessions.

“The Senate is not in recess,” Stewart said. He also said lawmakers in both parties have adhered to the practice of holding pro forma sessions to prevent recess appointments for some time, including during President George W. Bush’s presidency.

In 2010, Neal Katyal, a deputy solicitor general, said before the Supreme Court that “I think our office has opined the recess has to be longer than three days” before a recess appointment can be made.

To contact the reporters on this story: Hans Nichols in Washington at hnichols2@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.