Supreme Court could cause trouble for consumer watchdog

Nancy Marshall-Genzer Jun 20, 2013
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Supreme Court could cause trouble for consumer watchdog

Nancy Marshall-Genzer Jun 20, 2013
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The Supreme Court could announce as soon as Thursday whether it will consider a case on the constitutionality of some recess appointments made by President Obama. A recess appointment is when the president names someone to a government post while the Senate is on break. The case, National Labor Relations Board v. Noel Canning, has major implications for the Consumer Financial Protection Bureau. The president made the disputed recess appointments to the NLRB the same day he appointed the director of the CFPB.   

Initially, recess appointments were made for practical reasons. The president would appoint people to  government posts because the Senate was out of session for long stretches. As senators slowly made their way to Capitol on horseback. Now, presidents make recess appointments when they don’t think their nominee will be confirmed by the Senate. The director of the Consumer Financial Protection Bureau, Richard Cordray, is a recess appointee. 

Lawyer Alan Kaplinsky says, if the Supreme Court casts doubt on the constitutionality of some recess appointments, “There will be a cloud of uncertainty hanging over every action taken by Richard Cordray.”

Kaplinsky represents businesses that are regulated by the CFPB. He says the bureau’s authority over non-banks, like payday lenders, could be called into question.

Ed Mierzwinski, a consumer advocate for U.S. PIRG, thinks any court ruling would preserve the CFPB’s authority. 

“The court can choose to throw the director out without throwing the rules out,” he says. Including new mortgage rules the CFPB issued to prevent another housing crisis. 

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