Hensarling and CFPB disagree on impact of Supreme Court’s Canning decision


It should be no surprise that the CFPB and Republican Congressman Jeb Hensarling, who chairs the House Financial Services Committee, have different perspectives on the U.S. Supreme Court’s ruling last week that President Obama exceeded his Constitutional recess appointment authority when he filled three vacancies on the National Labor Relations Board in January 2012. 

In a statement issued after the court’s decision in NLRB v. Noel Canning was announced, Mr. Hensarling commented that the decision shows “clearly and unquestionably [that] President Obama exceeded his authority when he appointed Director Cordray, just as he exceeded his authority when he made these NLRB appointments.” According to Mr. Hensarling, the fact that Richard Cordray served as CFPB Director for 18 months before he was confirmed by the Senate “calls into question the legality of the official actions he took during this time period and may represent a legal risk for the CFPB.”

The CFPB, as might be expected, downplayed the decision’s significance. According to a Politico report, CFPB General Counsel Meredith Fuchs issued a statement indicating that the CFPB “do[es] not expect this decision to impact the CFPB or its important work.” She is also reported to have said that “Director Cordray was confirmed by the Senate in July 2013. The CFPB was not part of this case, and today’s decision does not include or mention the bureau or Director Cordray.”

While I agree with Congressman Hensarling that the Canning decision provides potential ammunition for challenging CFPB actions taken before Director Cordray’s confirmation, I would give low odds to such a challenge’s chances of success. As I told reporters from Politico and the Wall Street Journal who asked me to comment on what the decision means for the CFPB, someone could theoretically challenge the validity and effect of Mr. Cordray’s ratification of the actions he took prior to his confirmation as Director. However, at the end of the day, I very much doubt whether such a challenge would succeed.



DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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