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Richard Cordray Recess-Appointed Director of Consumer Financial Protection Bureau

Jan. 4, 2012

Earlier today President Barack Obama recess-appointed Richard Cordray as the first director of the newly-formed Consumer Financial Protection Bureau (CFPB), authorized by the Dodd-Frank Wall Street Reform and Consumer Protection Act. The president nominated Cordray in July 2011 for the position, but the Senate has not confirmed him. Today the president asserted the right to make a recess appointment, although there are likely to be challenges to the president’s interpretation of what constitutes a “recess” for purposes of exercising his appointment authority.

The appointment has significant substantive implications for financial services entities that are subject to enforcement and regulation by the CFPB. Without a director, concerns were raised as to whether the CFPB had the authority to promulgate rules and whether it could bring enforcement actions against non-bank financial institutions. Because of the legal uncertainty, the administration had neither authorized the promulgation of rules nor enforcement against non-bank financial institutions.

We anticipate that the CFPB will now move rapidly to promulgate rules and will also start enforcement actions as the agency has used the time since its inception in July 2011, to do the ground work underlying formal process.

Cordray is the former attorney general and treasurer of Ohio, clerked on the Supreme Court for Justice Kennedy and was the editor-in-chief of the University of Chicago Law Review.

For more information, please contact the following lawyers:

Chris Cox
Partner, Bingham McCutchen LLP
President, Bingham Consulting LLC
chris.cox@bingham.com
714.830.0606

 

Nicholas M. Gess
Of Counsel, Bingham McCutchen LLP
Principal, Bingham Consulting LLC
nicholas.gess@bingham.com  
202.373.6218

Stephen E. Merrill
Of Counsel, Bingham McCutchen LLP
Chairman, Bingham Consulting LLC
stephen.merrill@bingham.com  
617.951.8828

 

Sarah Reznek
Of Counsel, Bingham McCutchen LLP
Senior Consultant, Bingham Consulting LLC
sarah.reznek@bingham.com  
202.373.6171

James M. Rockett
Co-chair, Corporate and Regulatory Group
james.rockett@bingham.com
415.393.2025

 

Timothy J. Shea
Of Counsel, Bingham McCutchen LLP
Principal, Bingham Consulting LLC
timothy.shea@bingham.com
617.951.8806

Pete Wilson
Of Counsel, Bingham McCutchen LLP
Principal, Bingham Consulting LLC 
pete.wilson@bingham.com
213.680.6777

 

Circular 230 Disclosure: Internal Revenue Service regulations provide that, for the purpose of avoiding certain penalties under the Internal Revenue Code, taxpayers may rely only on opinions of counsel that meet specific requirements set forth in the regulations, including a requirement that such opinions contain extensive factual and legal discussion and analysis. Any tax advice that may be contained herein does not constitute an opinion that meets the requirements of the regulations. Any such tax advice therefore cannot be used, and was not intended or written to be used, for the purpose of avoiding any federal tax penalties that the Internal Revenue Service may attempt to impose.

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