Obama Chooses Politics Over Principle in Naming Consumer Bureau Head: View

President Barack Obama bypassed the
U.S. Senate and summarily installed Richard Cordray, the former
Ohio attorney general, as director 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. (BA) 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 Bloomberg View editorial board:
view@bloomberg.net.

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