House panel to scrutinize Cordray appointment

Reuters News
Posted: Jan 23, 2012 2:58 PM
House panel to scrutinize Cordray appointment

By Alexandra Alper

WASHINGTON (Reuters) - The House Judiciary Committee will hold a hearing on February 15 to investigate the constitutionality of President Barack Obama's controversial recess appointments to fill posts at the new consumer agency and the National Labor Relations Board.

Texas Republican Lamar Smith, who chairs the committee, said the recent appointments of Richard Cordray to head the Consumer Financial Protection Bureau, along with three members to represent the NLRB, may have violated the Senate's constitutional right to vet presidential appointments when in session.

"This power grab threatens the role of Congress and raises serious constitutional questions," Smith said in a statement.

The nominees were facing drawn-out Republican opposition. Obama's decision to bypass Congress is part of his re-election strategy of going around Republicans to get things done and tapping into voter hostility toward a gridlocked Congress.

The president has the authority to make appointments while the Senate is out of session.

Republicans have portrayed the recess appointments as possibly illegal because they were made while the Senate was still technically in session.

So far, Republicans have stopped short of filing a lawsuit to challenge the appointments, but a handful have asked Attorney General Eric Holder to weigh in on the legality of the move.

Republicans for months had held up Cordray's nomination to head the CFPB.

The CFPB was created by the 2010 Dodd-Frank financial oversight law to police consumer products such as credit cards and mortgages.

Democrats have heralded the bureau, which opened its doors in July, as a way to protect consumers from abusive lending practices, such as the type of home loans that were made in the years leading into the financial crisis.

Republicans have charged the agency is a virtually unchecked government body that will hurt lending and put small banks out of business.

The NLRB has also been a target for Republicans, who view it as a proxy of organized labor.

The National Federal of Independent Businesses became the first group to challenge the recess appointments on January 13. The U.S. lobbying group for small businesses is seeking to add the appointments challenge onto an earlier legal action it already had pending against the NLRB over a different issue.

The Chamber of Commerce, another business lobby, has not ruled out the option of a suit challenging the appointments, and Senate Republicans are said to be mulling a possible legal challenge as well.

(Reporting By Alexandra Alper; Editing by Gerald E. McCormick)