Editorial Board

Obama Chooses Politics Over Principle in Naming Cordray: View

President Barack Obama bypassed the U.S. Senate and summarily installed Richard Cordray, the former Ohio attorney general, of the Consumer Financial Protection Bureau yesterday.

Hours later, Obama filled three vacancies on the National Labor Relations Board, possibly the only agency Republicans dislike more than the consumer bureau.

The White House called these “recess appointments,” even though Congress technically wasn’t in recess. In doing so, the president is playing with fire. He risks an election-year legal challenge that could hamstring the consumer bureau and several other financial regulators whose pending confirmations will probably now stall. The president’s authority -- and that of future executives -- to fill administration posts without Senate approval may be limited by the courts. We think Obama risks too much to make what is largely a political point -- that he, more than the Republican Party, stands by American workers and consumers.

Senate Republicans have blocked Cordray, not because they think he’s unqualified but because they want to revamp the agency. Its financing, for example, comes from the Federal Reserve, making it harder for lawmakers to bend the agency to their will than if they controlled the purse strings. As for the NLRB, Republicans say the board is advancing an anti-business, pro-labor agenda, especially after it filed a complaint against Boeing Co. for trying to build planes in South Carolina while workers were on strike in Washington state.

Deep Frustration

We understand why the president, out of deep frustration, went around Republican senators. Under the Dodd-Frank law that created the consumer bureau, it can’t issue rules or regulate many financial firms, including payday lenders, debt collectors and mortgage brokers, absent a full-time director. The NLRB, which enforces labor laws, is stymied with three out of five seats vacant -- not enough for a quorum.

Nevertheless, our desire to have effective regulation doesn’t trump our reservations over the president’s unusual methods. If the goal was to improve government function, Obama might have achieved the opposite by all but inviting Senate Minority Leader Mitch McConnell to sue.

The Constitution clearly gives the president the power to make appointments when the Senate is in recess. The issue, then, is what makes a recess a recess? The Congressional Research Service in December said decades of 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 recess appointment.

Lawmakers have resorted to holding so-called pro forma sessions every third day while Congress is out of town to block undesired appointments. Like much of what happens in Washington, the sessions are make-believe events in which the Senate is gaveled into business but conducts no real work. Senate Democrats during the second term of President George W. Bush were especially adept with this stratagem.

White House lawyers have concluded that the pro forma sessions don’t prevent Obama from making appointments. We think the president, who is making confrontation with congressional Republicans a major theme of his re-election effort, is choosing politics over principle, and playing dangerously with the Constitution’s checks and balances, in choosing to tell the Senate when it is and is not in session.

From where we sit, it also looks as if the president is bowing to his liberal base, which has long urged him to act more aggressively on vacancies. Cordray even accompanied Obama on Air Force One to Ohio so the president could make the announcement in Cordray’s home state -- likely to be a battleground in November.

Endangered Recovery

The appointment, moreover, will surely heighten the clash between Obama and Congress over a full-year extension of the payroll-tax cut for workers and unemployment insurance for the jobless, endangering the recovery. The president also needs Congress’s cooperation on pending Federal Reserve Board and other bank-regulator nominations.

Instead of playing gotcha, setting back progress on Dodd-Frank regulations and possibly upsetting the system of checks and balances, Obama and Republican leaders should agree on a set of recess appointment rules. Here’s one idea to get the ball rolling: In exchange for confirming Cordray, Obama and Senate Democrats would open talks on making the consumer bureau subject to the congressional appropriations process. That way, Obama could have his chief consumer watchdog, and Congress could make sure its role is not being usurped.

    To contact the senior editor responsible for Bloomberg View’s editorials: David Shipley at davidshipley@bloomberg.net .

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