It’s rare we get to see a necromancer right-wing think-tank intellectual create a zombie idea – the kind that never dies, but lurches on and on in the right-wing media no matter how much it gets hit – in real-time. But that’s what we are seeing with Mark Calabria, director of financial regulation studies at the Cato Institute, arguing that the recess-appointed director of the Consumer Financial Protection Bureau, Richard Cordray, won’t have full powers because of how the Dodd-Frank Act is written.
To start, Carter Doughtery at Bloomberg has a great article, Cordray Appointment Activates Full Powers of New Consumer Bureau, which has many experts explain that “President Barack Obama’s decision to install Richard Cordray as director of the Consumer Financial Protection Bureau activates the full authority granted to the agency by the Dodd-Frank regulatory overhaul.”
However there’s a dissent in the piece from Mark Calabria. That dissent is based on his post at Cato’s website, Obama’s Constitutional Gamble on Consumer Finance Nomination (my bold):
More importantly the “recess” appointment of Cordray doesn’t solve the President’s problem. The Dodd-Frank Act is very clear…that authorities under the Act remain with the Treasury Secretary until the Director is “confirmed by the Senate”. A recess appointment is not a Senate confirmation. Now don’t ask me why Dodd and Frank included such unusual language, they could have just given the Bureau the new authorities, but they didn’t. So even with this appointment, the CFPB won’t be able to go after all those non-banks…
Daniel Foster links to it at National Review, and I’m sure the contagion is spreading far and wide.
Hmmm. “Confirmed by the Senate”. Are we sure the language maybe didn’t say something in addition to that? Did someone accidentally delete something that came after “Confirmed by the Senate”? Let’s go to the Dodd-Frank Act, Section 1066, which is where he pulls the language (my bold):
SEC. 1066. INTERIM AUTHORITY OF THE SECRETARY.
(a) IN GENERAL.—The Secretary is authorized to perform the functions of the Bureau under this subtitle until the Director of the Bureau is confirmed by the Senate in accordance with section 1011.
Huh. “Confirmed by the Senate” is actually “confirmed by the Senate in accordance with section 1011.” What’s section 1011? The following (my bold):
SEC. 1011. ESTABLISHMENT OF THE BUREAU OF CONSUMER FINANCIAL PROTECTION….
(b) DIRECTOR AND DEPUTY DIRECTOR.—
(1) IN GENERAL.—There is established the position of the Director, who shall serve as the head of the Bureau.
(2) APPOINTMENT.—Subject to paragraph (3), the Director shall be appointed by the President, by and with the advice and consent of the Senate.
To be in accordance with Section 1011, or be in accordance with the section Cato left out of the picture, goes with ordinary “by and with the advice and consent of the Senate”, the stuff that is in the Constitution. Which means that recess appointments are totally appropriate for full responsibilities taking over – to be in accordance with the language of Dodd-Frank is just normal procedure for the Senate and appointments. Nothing special here, just ordinary language on how the Senate deals with appointments. Nothing special here, unless you lop off half a sentence of the Act’s language in Section 1066.
I checked in with David Arkush of Public Citizen, who emailed me the following about Cato’s argument:
Sec. 1011 says the director is appointed by the president, with the “advice and consent” of the Senate. This doesn’t look like anything but a recitation of the Constitution’s advice and consent requirement for such an appointment. Then, sec. 1066 grants Treasury interim powers “until the Director of the Bureau is confirmed by the Senate in accordance with section 1011” (emphasis added). Sure, it says, “confirmed by the Senate.” But it also says “in accordance with section 1011” – meaning that it’s not adding any requirements over and above what sec. 1011 says. Rather, it refers to the same process of installing a director as that outlined in section 1011.
Indeed all of the commentary I’ve ever seen on this has indicated that a recess appointment would give full powers to the CFPB. Here’s Congressional Research Services’ May 2011 report Limitations on the Secretary of the Treasury’s Authority to Exercise the Powers of the Bureau of Consumer Financial Protection, footnote #3:
P.L. 111-203 § 1011. Although the CFP Act requires the CFPB Director to be confirmed by the Senate, the President could appoint a Director temporarily without Senate confirmation through his constitutionally provided power to make recess appointments. See U.S. Const., art. II, § 2, cl. 3 (“The President shall have Power to fill up all Vacancies that may happen during the Recess of the Senate, by granting Commissions which shall expire at the End of their next Session.”). A recess-appointed Director likely would be considered to have all of the authorities that would be held by a Senate-confirmed Director. CRS Report RL33009, Recess Appointments: A Legal Overview, by Vivian S. Chu.
Let’s go to CRS Report RL33009, Recess Appointments: A Legal Overview, by Vivian S. Chu to follow that citation:
As a fundamental matter, a recess appointee possesses the same legal authority as a confirmed appointee.
 See also Hogue, supra note 3, at 4; Swan v. Clinton, 100 F.3d 973, 987 (D.C. Cir. 1996) (recess appointment is not an “inferior” procedure to appointment with Senate confirmation); Designation of Acting Solicitor Labor, 2002 WL 34461082 (2002) (distinguishing between an temporary designation under the Vacancies Reform Act and a recess appointment—“An acting official does not hold the office, but only ‘perform[s] the functions and duties of the office.’[citation omitted] He is not ‘appointed’ to the office but only ‘direct[ed]’ or authorized to discharge its functions and duties, and thus he receives the pay of his permanent position, not of the office in which he acts. [citation omitted] A recess appointee, on the other hand, is appointed by one of the methods specified in the Constitution itself, [citation omitted]; he holds the office; and he receives the pay.”).
Is that enough to take down the zombie? Did we hit the brain, or just the jaw? I’m scared to go inspect the body….
(Bonus: “The President shall have Power to fill up all Vacancies that may happen during the Recess of the Senate, by granting Commissions which shall expire at the End of their next Session.” -Art. II, § 2, cl. 3. I like how libertarians at Cato are all about the Constitution, with grants the President the power to fill up vacancies, until they aren’t.)