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Because the Dodd-Frank Act places so much authority — with so little accountability — in the hands of the director of the new Consumer Financial Protection Bureau, the law requires that this administrator be nominated by the president and confirmed by the Senate. Yet there are now rumblings the president may circumvent the Senate’s advice and consent — and ignore the law he signed — by filling the bureau’s directorship through a recess appointment.
A recess appointment in this circumstance would be inappropriate and is inconsistent with the Constitution. Article II provides that the president has the “power to fill up all vacancies that may happen during the recess of the Senate.” But this directorship did not “happen” to become vacant. It is a position that never before existed. Thus, there is no vacancy to fill.
The 1998 Federal Vacancies Reform Act, which allows the president to temporarily fill vacancies in the executive branch, also offers no help here. The act describes a vacancy as occurring when an officer “dies, resigns or is otherwise unable to perform the functions and duties of the office.”
In other words, the position must have existed and been occupied by another officer for it to be temporarily filled without Senate confirmation. But the CFPB office has never been occupied. If the president made a recess appointment, it would not be pursuant to any act of Congress or the Constitution.
There is a great deal at stake. If the president were to resort to a recess appointment to name the first director, whatever regulations the bureau adopts could be immediately challenged on constitutional grounds — and would very likely be overturned based on the text, history and cases that have interpreted the recess-appointments clause.
But even if the courts disregard the Constitution’s text and sustain a recess appointment to fill a position that never before existed — and thus has never been “vacant” — the uncertainty arising from the appointment, the questionable validity of whatever regulations are adopted by this “director” and the inevitable litigation are all strong policy reasons that the president should avoid trying to end run the requirement of Senate confirmation.
The president is free to nominate whomever he pleases. But as the Founding Fathers realized — and every child knows — our government is a system of checks and balances. Because the bureau will be, effectively, whatever its director wants, the legitimacy of the bureau depends on ensuring that its director is nominated and confirmed in accordance with the requirements of both Dodd-Frank and the Constitution.
This is not a partisan view. The former chairman of the Senate Banking, Housing and Urban Affairs Committee and co-author of the reform legislation, Democrat Chris Dodd, repeatedly expressed opposition to a recess appointment — and even interim, unconfirmed leadership as exists today. “We need a director,” Dodd said. “And someone that’s confirmable. And anything short of that, I think, you put this bureau in some jeopardy.”
The need for Senate advice and consent is made more urgent by the CFPB’s unique governance structure — unlike any other in the federal bureaucracy. The director serves for a fixed term, and is, therefore, exempt from presidential control. The head exercises sole authority over the agency and has the singular power to spend hundreds of millions of dollars outside the congressional appropriations process. Though some other regulatory bodies have some of these features, no other entity in federal government combines all of them.
Instead of a single director, the CFPB should be led by a multimember, bipartisan panel like virtually all other independent agencies — including the Consumer Product Safety Commission, the Federal Communications Commission, the Federal Deposit Insurance Corp. and numerous others. In fact, such a commission was approved by the House during debate over what became of the Dodd-Frank Act. It was unwisely dropped during conference.
A commission would ensure differing points of view are considered, promote certainty and continuity by preventing a new director from unilaterally reversing earlier decisions and carry out regulatory initiatives consistent with the safety and soundness of the country’s financial system.
Though Dodd-Frank supporters consider any criticism of the CFPB to be an attack on consumers, no one opposes consumer protection. Republicans firmly support sound consumer protection regulations and the vigorous enforcement rules. However, appointing a CFPB director without Senate approval is both constitutionally questionable and in direct conflict with the very law that created the bureau.
Instead of evading this check on his executive authority by making a controversial recess appointment, President Barack Obama needs to respect the separation of powers and the law — and seek the Senate’s advice and consent.
Rep. Spencer Bachus (R-Ala.) is chairman of the House Financial Services Committee
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