Senate Confirms CFPB Chairman — Scrutiny Of Lenders' Business Practices Go Under The Microscope

Those that anticipated a dramatic Supreme Court confrontation over the legitimacy of Richard Cordray as director of the Consumer Financial Protection Bureau (CFPB), and perhaps a nullification of all of the nascent agency's rules and actions to date, are disappointed this week. Those who expected a political solution, along with some certainty in consumer finance regulation, can finally exhale. The Senate has confirmed Mr. Cordray's January 2012 recess appointment, despite the legal questions about such appointments raised by the D.C. Circuit's recent opinion in Noel Canning v. NLRB.

As part of a larger deal between Senate Democrats and Republicans concerning confirmation of President Obama's executive branch appointments, the full Senate on Tuesday night voted 66-34 to confirm Mr. Cordray as CFPB director. Tuesday's vote removed questions that had surrounded the legitimacy of President Obama's recess appointment of Mr. Cordray, a former Ohio Attorney General. In January of this year, the D.C. Circuit Court of Appeals in Noel Canning v. NLRB invalidated three of President Obama's recess appointments to the National Labor Relations Board, ruling that intrasession -- as opposed to intersession -- appointments are invalid under the Recess Appointments Clause. Noel Canning's logic extended to Mr. Cordray's appointment, which occurred on the same day as those at issue in Noel Canning. Indeed, the questionable recess timing of Cordray's appointment isn't the only factor that had suggested its invalidity. Some have argued that, as the directorship of the CFPB was a new position and thus had never been occupied to begin with, there could be no vacancy and thus could not be filled via recess appointment even if the Senate had actually been in recess. The Senate's confirmation of Mr. Cordray has obviated many of these questions, establishing his legitimacy through political, rather than judicial, action.

In a video statement posted on the CFPB website, Mr. Cordray stated that his confirmation brings "added certainty to the industries we oversee and reinforces our responsibility to stand on the side of consumers and see that they are treated fairly in...