WASHINGTON -- Less than a day after his controversial recess appointment, Richard Cordray on Thursday moved full steam ahead with his plans for running the new Consumer Financial Protection Bureau, brushing aside questions about the legality of his appointment.
"I am honored to serve as the first director of the bureau," Cordray said during remarks at the Brookings Institution. "Now, for the first time, we can exercise the full authorities granted to us under the new law. That is the specific difference that having a director makes."
With its director in place, the CFPB has the ability to begin supervising nonbanks, many of which are the same entities that engaged in the kinds of predatory lending practices that sparked the financial crisis. The bureau's work in this area will involve "dealing face to face with payday lenders, mortgage servicers, mortgage originators, private student lenders and other firms that often compete with banks but have largely escaped any meaningful federal oversight," Cordray said.
Cordray, a former Ohio attorney general and five-time "Jeopardy" winner, also responded to critics who say his appointment is illegal. "I have been appointed as director of the bureau. It's a valid appointment," he said. "This is a big job to protect consumers across this country and I'm going to be 100 percent focused on doing that job."
The agency, which was created under the 2010 Dodd-Frank financial reform legislation, began some operations in July but has lacked teeth without a director. It is the brainchild of Harvard law professor and now-Massachusetts Senate candidate Elizabeth Warren.
Cordray said the bureau has already gotten some important work done in the six months it has operated without a director. Having served as CFPB's head of enforcement prior to this week, Corday described "outrageous" stories of consumers being hurt by hidden fees and high interest rates, and described instances of unnecessarily aggressive debt collectors following around people for years, leaving them unable to escape bad credit.
"The consumer bureau will make clear that there are real consequences to breaking the law," he said. "We have given informants and whistleblowers direct access to us. We took over a number of investigations from other agencies in July, and we are pursuing some investigations jointly with them. We have also started our own investigations. Some may be resolved through cooperative efforts to correct problems. Others may require enforcement actions to stop illegal behavior."
Thursday's event marked Cordray's first speech since President Barack Obama used his executive authority to bypass the Senate -- challenging the very idea of how Congress defines being in session -- and appoint Cordray to the agency. The move has infuriated House and Senate Republican leaders, who say Obama should prepare for a court challenge, since the Senate wasn't technically in recess when Obama appointed Corday. The White House legal team counters that Republicans have been relying on "a gimmick" to prevent the president from making recess appointments, and therefore GOP efforts to keep the Senate in nonstop "pro forma" sessions instead of recessing -- effectively filibustering the president's nominees -- don't mean anything.
The White House is standing firm in its legal argument. "We feel very comfortable, as a legal matter, that the Constitution trumps gimmicks," White House Press Secretary Jay Carney said during a Thursday briefing.
"The fact is, it was simply a matter of the agency could not act and function without having the requisite number of board members," Carney said. "I think the president, I think with clear justification, believed that he had to do this in order to ensure that this independent agency could function."
Don Stewart, a spokesman for Senate Minority Leader Mitch McConnell (R-Ky.), said it is worth noting, however, that despite Democrats' broad support for Cordray's appointment, none are defending the legality of Obama's move outright.
"Not a single Senate Democrat has come forward to back the White House's novel claim that the Senate is 'in recess,' despite the fact that both houses of Congress meet every three days," said Stewart. "And remember, the House and Senate passed the two-month extension of the payroll tax holiday on the 23rd -- when the White House claims we were 'in recess,' and in a pro forma session that they call 'a gimmick.'"
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