Fasten Your Seatbelt, Mr. Cordray

President Obama with Richard Cordray (photo via bloomberg.com)

It’s nice to see the Consumer Financial Protection Bureau get its first director, despite the shaky constitutionality of Richard Cordray’s recess appointment. The CFPB, a consumer watchdog agency established to guard against the abuses that led to the 2008 financial crisis, has been operational since July, but cannot regulate non-bank institutions — e.g. payday lenders, mortgage originators — until it has a director. Republicans, who hate the idea of the CFPB and charge that it is unaccountable to lawmakers, have filibustered Cordray’s nomination. Naturally, Republicans aren’t opposed to the idea of a CPPB director in theory. As CNN reports, the GOP is asking for ” three big changes to how the bureau is overseen,” including replacing the director with a board. Republicans have “vowed to block confirmation of any nominee to run the bureau until the president agreed to approve those structural changes.” Let me get this straight: Republicans would be perfectly happy to let Obama fill the position . . . just as soon as Congress passes legislation eliminating the position. Yeah, it’s some catch, that catch-22. That’s why Wednesday’s announcement that Obama would recess-appoint Cordray, as well as three similarly filibustered nominees to the National Board of Labor Relations, was refreshing in spite of its uncertain constitutional grounds. Conservative politicians and pundits immediately panned the appointment as “lawless” (Charles Krauthammer) and “arrogant” (Sen. John Cornyn). I don’t find Obama’s actions to be either, though I’m not sure they were entirely on the up-and-up.

At first the mystery was why, given the chance a day earlier to appoint Cordray during the seconds-long gap between the first and second years of the 112th Congress, President Obama chose the option with shakier legal backing. Jonathan Cohn at the New Republic has the answer: “The problem, it turns out, is that there was no intermission between the sessions this time because the Senate never formally recessed, not even for a nanosecond.” Republicans have been calling pro-forma sessions while the majority of Congress is on vacation for precisely the purpose of preventing recess appointments; apparently, they thought to close the year-end loophole as well. And, by acting today, Obama was able to stretch Cordray’s tenure to the end of 2013, thus avoiding an election-season restaging of the battle in December 2012.

That said, I disagree with Cohn’s conclusion that the appointment was constitutional. He writes that, “legally, the issue is very simple. If the Senate was not in session on Tuesday, then Obama had authority to make the appointments.” So far so good. But then Cohn accepts the administration’s rationale that the pro-forma sessions were not “real” sessions because no business was conducted. White House officials “note that the motion (by Oregon Senator Ron Wyden) to have these pro forma sessions said explicitly that there would be ‘no business conducted.'” Whether or not business was conducted seems irrelevant to me. Nowhere does the Constitution state that the legitimacy of a Congressional session depends on the git-‘er-done productivity of its members. Heck, if actual accomplishments were required to make a session of Congress constitutionally valid, Obama could have been making recess appointments right and left since the do-nothing 112th began. I find myself in the uncomfortable position of agreeing with Edwin Meese, Ronald Reagan’s attorney general and a current chairman of the conservative Heritage Foundation, who writes in the Washington Post that neither chamber of the legislature can adjourn for more than three days without the consent of the other — and the House of Representatives has explicitly not given the Senate that permission. Furthermore, the administration undermined its own assertion that the pro-forma sessions don’t count when Obama signed legislation passed on Dec. 23 in . . . yes, a pro-forma session. “The president cannot pick and choose when he deems a Senate session to be ‘real,'” Meese and co-author Todd Gaziano write.

But there is light at the end of the tunnel. Jonathan Cohn also reports that White House Counsel Kathy Ruemmler told him the following:

These appointees were necessary for these government agencies to function. The agencies were created to enforce duly passed laws, the Dodd-Frank Act and the National Labor Relations Act. The president has a constitutional obligation to enforce the laws and to make sure that personnel necessary to enforce the laws are in place.

This is where I think Obama is on firmer ground, though perhaps not for the recess-appointment legal minutiae the administration cites. Ezra Klein, of the Post’s Wonkblog, picks up on an argument that James Fallows has been making at The Atlantic for quite awhile: that the Republican tactic of refusing to confirm nominees for agencies like the CFPB and the National Labor Relations Board, which cannot fully function without the appointees in question, amounts to what Congressional scholar Thomas Mann calls “a modern-day form of nullification.” By denying the CFPB a director and the NLRB a quorum, Republicans are not just leaving vacancies on federal courts or keeping agency leaders on “acting” status. Instead, they are “using their power to block nominations to hold kill or change agencies that they didn’t have the votes to reform through the normal legislative order.” While the Constitution gives the Senate the power to “advise and consent” on nominations, it does not enable the legislature to “nullify” legitimately established agencies or laws it dislikes. Klein continues:

That’s what Mann means when he invokes “nullification”: just as the original nullification crisis was about states refusing to implement federal laws that their representatives did not have the votes to overturn, the modern-day incarnation features Republicans refusing to implement laws they don’t have the votes to overturn.

James Fallows concurs that Republicans should not be allowed to hijack the nomination process to do an end-run around the difficulty of repealing unattractive legislation. If the GOP wants to get rid of the CFPB, then “let them make that case on the stump this year. If they prevail, they can overturn this law and replace it with what they would like. But until and unless that happens, the CFPB is a legitimately enacted organ of government and should be allowed to function.” According to this logic, Obama’s actions were not “a viligante act of an imperial presidency” (according to Fox News analyst Peter Johnson) but a demonstration of restraint. He could have chosen to recess-appoint all 202 of the nominees, for positions ranging from federal judgeships to the top job at the FDIC, still in the confirmation process. Many of these nominees have been blocked by Republicans, or by a single Republican (it only takes one Senator to place a “hold” on a nominee), and have little chance of ever being approved. Ezra Klein takes us through some of the reasons, including the limited duration of recess appointments and the obvious backlash that would face such a sweeping act. Mostly, however, Klein attributes the president’s relative caution to the difference between an average nominee and a nominee required for an agency to function. He returns us to nullification: “The answer is, without [these nominees], the institutions they’re intended to lead will fail. Obama’s maneuver was about the agencies, not the appointees.”

Does the fight against “nullification” make Obama’s constitutionally dubious actions acceptable? Does the CFPB’s “right” to exist take precedence over the Senate’s right to approve federal nominations? I’m not sure. But recess appointments would not have been necessary if the legislature had not shirked its duty to follow through on its own laws. Congress has always had the power of the purse, and despite the repugnance of Republican attempts to hamstring agencies like the EPA and the SEC by starving them of funds, the budget process is at least a legitimate vehicle for influencing hated (albeit duly passed) legislation. Casting the recess appointments as the fulfillment of Obama’s duty to keep the government functioning avoids getting bogged down in the details of what does and does not constitute a session of Congress. In an op-ed for the Times, Lawrence Tribe offers his own Constitutional citation, arguing that Article II, which instructs the president to “take care that the laws be faithfully executed,” permits “an irreducible minimum of presidential authority to appoint officials when the appointments are essential to execute duly enacted statutes.” Unanswered is whether this authority overrides restrictions against appointments when Congress is not officially in recess. Unfortunately, Tribe concludes that “the gimmicky nature of pro forma sessions is best understood as one among several factors that combine to present unconstitutional interference with the president’s irreducible power and duty.” If Obama’s “irreducible power and duty” is enough to support Cordray’s appointment, why rely on a subjective opinion about pro-forma sessions that has no constitutional underpinnings? I doubt Thomas Jefferson’s vocabulary included the word “gimmicky.”

Timothy Noah, a colleague of Jonathan Cohn’s at TNR, takes exception to Tribe’s logic. “The White House maintains that keeping the Senate in pro forma session is a stupid gimmick, which is certainly true,” he writes. “It further maintains that because it is a stupid gimmick, that gives the president the right to act as though the Senate were in recess. That’s the part I have trouble following.” Noah makes it clear that he supports the mission of the CFPB and “favor[s] a bolder stance by our president to counter Republican obstruction,” but despite several updates to his original post in which Noah relates the pro-appointment arguments of various constitutional scholars, he still isn’t convinced that Obama is technically in the right.

That may be — and that is certainly what the Chamber of Commerce will argue when it sues the administration to get the appointments tossed out. Beyond bluster, though, I’m not sure that there is much Congressional Republicans can do. Obama has made his move, Cordray has been installed at the CFPB, and the only remaining course of action may be to battle to repeal Dodd-Frank via the tried-and-true legislative process, as James Fallows suggested. Fallows has since followed up with what he calls a “cautionary view” from Mike Lofgren, a “former long-time Republican Senate staffer who has recently been writing about the destructive extremism of the current Congressional Republican party.” Lofgren moves beyond the nuts and bolts of constitutionality and addresses the practical repercussions of the recess (or non-recess, as the case may be) appointment. He believes Obama may have won a pyrrhic victory, as all forthcoming decisions by the CFPB will be shadowed by uncertainty. Lofgren writes that “One can assume every affected business will sue the government in federal court on the grounds that the bureau did not have the authority to make that decision.” Because the bureau is required to have a director before it can regulate non-bank financial institutions like payday lenders, it will be a fairly simple proposition to argue that any new regulations are invalid. Lofgren adds, somewhat darkly, that “you may be certain the Chamber of Commerce and other business lobbies will spend whatever it takes to litigate the issue all the way to the Supreme Court.” Republican consternation over the appointment is likely to dog other issues as well, further poisoning the well of bipartisanship and putting any semblance of compromise out of reach. The extension of the payroll tax cut comes to mind as a potential casualty. The Times quotes GOP Senator John Barrosso as warning that “It’s going to be very difficult for him to get anybody confirmed by the United States Senate.” This is hardly news, considering that Republicans have blocked a record number of Obama’s nominations to the federal bench and other regulatory agencies, effectively raising the bar for approval from 50 to a filibuster-proof 60. Yet the White House seems to have weighed its options and judged the fallout an affordable price to pay to bolster Obama’s anti-Wall Street credentials. As the Times reports, “Administration officials say they understand that their nominees will face an even steeper battle in the Senate now but accept it as a consequence of using Congress as their bête noire, part of Mr. Obama’s re-election strategy.”

Whatever the political calculation, I’m delighted by Obama’s sudden realization that he possesses a backbone, even if Elizabeth Warren is somewhere in Massachusetts thinking dark thoughts about the president. The president known for a while now that the GOP will brook no level of administration success. These are the same folks who discounted the president’s role in nailing Osama bin Laden, for Pete’s sake. Given the predictable backlash, it’s slightly ironic that Obama chose to spend precious political capital — he may even be deficit spending by now in the good will department, for all I know — installing his second-choice CFPB director. Elizabeth Warren, who is to the Chamber of Commerce what Margaret Sanger is to the pro-life movement, is probably thinking, Heckuva time to grow a spine, Mr. President. Of course, the response to a Warren appointment would have been even bloodier, and Warren’s chance to head the CFPB has long passed.

I have to admit that I’m ready to give the president a pass on the constitutionality issue simply because it’s heartening to see him standing up for progressive beliefs. The other option, for the executive to remain supine in the face of the Senate’s replacement of “advise and consent” with “berate and stonewall” is hardly an attractive alternative. That logic is not exactly at a premium in D.C. is evident in the GOP’s call to hold the CFPB accountable to the same Congressional committees and government regulators who failed to notice the housing bubble and predatory lending practices in the first place. For now, it seems that Obama has won this round of the CFPB fight. Unfortunately, Washington is not known to be a place where one can escape the truism that no good deed goes unpunished.