While the CFPB has not yet issued a formal written statement about the impact of the D.C. Circuit’s recent opinion in Canning v. NLRB on the Bureau, the Wall Street Journal reported in its weekend edition that a CFPB spokesperson has said that the Bureau “is not a party in the case decided today and the court’s ruling has no direct effect on the Bureau.”
That is, of course, an accurate statement. However, the Bureau needs to say and do much more than that. As we stated yesterday in our legal alert about Canning, the opinion’s logic applies to President Obama’s appointment of Richard Cordray. If Canning does not get vacated by the D.C. Circuit or reversed by the Supreme Court, it is only a matter of time before a court (probably the D.C. federal district court) directly holds that Richard Cordray’s appointment is unlawful.
This issue is not going away any time soon. There is a cloud of great uncertainty with respect to the validity of every official act that Mr. Cordray has taken since he was appointed on Jan. 4 of last year. That uncertainty will apply to all of his future acts unless the Senate confirms his nomination – something which is politically unacceptable to the Republicans. The banks and other industries being regulated, supervised and investigated by the Bureau and consumers have the right to know now what contingency plans are being made by the Bureau to ensure that Mr. Cordray’s official acts are valid. Since Section 1066 of Dodd-Frank gives the Secretary of the Treasury the power to take certain actions when the Bureau has no Director, hopefully Mr. Cordray and Acting Secretary of the Treasury Wolin are consulting with one another and developing a strategy for dealing with the uncertainty that now exists.