WASHINGTON A Republican congressional leader on Tuesday called on the Federal Reserve to determine the legality of some $350 million in spending on the Consumer Financial Protection Bureau in light of questions about the validity of Richard Cordray’s recess appointment by the president last year to direct the fledgling agency.
“Because it appears there is not presently a validly-appointed director of the CFPB, I question the circumstances under which the [Fed] Board may lawfully fund the CFPB’s operation,” wrote House Banking Committee Chairman Jeb Hensarling of Texas in a letter last Friday to Federal Reserve Chairman Ben Bernanke.
Hensarling, a leading opponent of the new agency, insists that January’s appeals court ruling invalidating three recess appointments to the Federal Labor Relations Board last year will extend to Cordray’s recess appointment and invalidate his tenure at the CFPB.
The House Republican’s new offensive came just before Senate Republicans were calling on Cordray to open up the new agency’s books to Congress during a hearing on the CFPB nomination yesterday.
Idaho Republican Mike Crapo questioned $150 million half the new agency’s budget for 2012 being spent on vendors and said Congress has a right to know more about the contracts. Cordray said most of that money was spent on systems and hardware start-up costs for the new agency. Cordray said he would agree to share more information with congressional budget overseers, if they wanted.
But Cordray made little headway with the Senate Republicans, who said they continue to oppose any nomination to direct the CFPB until President Obama and Senate Democrats agree to change the structure of the agency to their liking. That includes replacing the single director with a multi-person board and giving congress direct authority over the agency’s spending.
The banking committee is expected to vote to endorse the Cordray nomination and send it to the floor because the Democrats have a majority of members. But the continued Republican opposition poses serious obstacles to getting Cordray confirmed to a full five-year term as director. If not, his recess appointment expires at the end of this year.
