Representative Hensarling on the CFPB

The logical import of Noel Canning v. NRLB, the D.C. Circuit’s decision striking down President Obama’s unilateral, non-recess NRLB appointments, is that the president’s similar CFPB director appointment is also unconstitutional. House Financial Services Committee chairman Jeb Hensarling agrees (h/t Todd Zywicki). In a letter last week to Federal Reserve chairman Ben Bernanke, Representative Hensarling questions if the Fed should suspend its CFPB funding in light of Noel:

Although the petitioner in this case challenged only the action of the NRLB, the President putatively appointed Richard Cordray as CFPB Director at the same time and in the same manner as the NRLB members. Accordingly, I anticipate that a federal court will soon reach a similar conclusion with respect to the validity of Mr. Cordray’s appointment.

As you know, the Dodd-Frank Wall Street Reform and Consumer Protection Act (P.L. 111-203) (“Dodd-Frank”) authorizes the Board to transfer funds to carry out the authorities of the CFPB only at the request of its director. Because it appears there is not presently a validly appointed director of the CFPB, I question the circumstances under which the Board may lawfully fund the CFPB, I question the circumstances under which the Board may lawfully fund the CFPB’s operations.

I believe that decisions to fund the CFPB must be scrutinized by, and traceable to, a properly appointed officer of the United States, consistent with Dodd-Frank’s intent and the constitutional requirement that significant authority of the United States be exercised only by such officers. Thank you for your prompt attention to this matter. I look forward to the Board’s response.

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