Hensarling questions CFPB actions after recess appointment ruling

The top House Republican is questioning whether the Consumer Financial Protection Bureau engaged in illegal behavior while its director operated under a controversial recess appointment.

House Financial Services Committee Chairman Jeb Hensarling (R-Texas) said Thursday that a recent Supreme Court ruling has created new questions about whether the CFPB’s actions under Director Richard Cordray, when he was recess appointed to the position, were within the bounds of the law.

On Thursday, the high court unanimously ruled that a trio of identical appointments to the National Labor Relations Board violated the Constitution, because they occurred at a time the Senate did not consider itself in recess. President Obama recess appointed Cordray to his position the exact same day.

Cordray was later formally confirmed by the Senate, and his recess appointment was not at issue in the Supreme Court case. But Hensarling, a long-time critic of the agency, said the roughly 18 months Cordray spent running the bureau without formal confirmation were done so on a legally invalid basis.

“This fact calls into question the legality of the official actions he took during this time period and may represent a legal risk for the CFPB,” Hensarling said in a statement.

Hensarling’s panel previously protested the way Cordray originally reached his position by refusing to hear his testimony while he was still operating under a recess appointment, arguing he was not legally qualified to testify there.

For its part, the CFPB argued Thursday that the Supreme Court ruling would have no bearing on the work the CFPB has done before or after Cordray was confirmed.

"We do not expect this decision to impact the CFPB or its important work. Director Cordray was confirmed by the Senate in July 2013,” said CFPB General Counsel Meredith Fuchs. “The CFPB was not part of this case, and today's decision does not include or mention the Bureau or Director Cordray.”

After he was officially confirmed, Cordray also took the step of reaffirming and ratifying all actions he took while serving under a recess appointment, in an effort to protect the CFPB from any legal challenges stemming from it.