Johanns to Cordray: ‘I Can’t Imagine How Anyone Can Maintain Your Service Is Valid’

By Pete Winn | January 31, 2012 | 3:38 PM EST

President Barack Obama and Richard Cordray. (AP Photo)

( - Richard Cordray did not face a threatened boycott by Republican senators during his appearance Tuesday before the Senate Banking, Housing and Urban Affairs Committee, but Sen. Mike Johanns (R-Neb.) told Cordray that President Obama had unconstitutionally appointed him as director of the Consumer Finance Protection Bureau.

Johanns said he did not intend to “revisit” and “stir up” the controversy surrounding Cordray’s possibly unconstitutional recess appointment, “because I think that’s going to happen. I think there’s going to be litigation that will make that happen.”

But Johanns politely but firmly told Cordray he did not accept the validity of the appointment.

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“(I)n my mind your being here today raises some very fundamental questions about the Constitution – about the inter-relationship of the president with Congress and ultimately, at the end of the day, the extent of your power in this position,” Johanns said.

Obama used a recess appointment to make Cordray head of the Consumer Finance Protection Bureau, but Republican senators challenge the move as unconstitutional, because Congress was not in recess when the appointment was made.  

“(I)f we accept the premise of your validity in this position, then we accept the premise that our ability to offer advice and consent basically disappears,” Johanns said, “because the president can determine when we’re in recess and when we’re not in recess – and just appoint whoever. And then we don’t have a constitutional provision for advice and consent of the Senate.”

Johanns, who pointed out that he had to be confirmed by the Senate to serve as secretary of Agriculture under President George W. Bush, told Cordray the legality of his actions as director were in doubt because the constitutionality of Cordray’s appointment was in doubt.

The Nebraska senator quoted from a 1989 decision from the U.S. District Court for the District of Columbia which upheld the right of a company to go to court to block the then-director of the newly created Office of Thrift Management from taking any action because his appointment was invalid.

“So not only do we have this constitutional issue, which I think is fundamental to our power of advice and consent under the Constitution, but if you are successfully challenged, would you agree with me that your actions will be invalid during the time that you are in this position?” Johanns asked Cordray.

Cordray replied that the situation was not “clear cut,” either way.

“Senator, I don’t believe I know that that’s clear cut, one way or the other,” Cordray said. “It is not clear cut by any means that this is not a valid appointment. I believe it is. I’ve read the Justice Department’s opinion, which I thought was persuasive, but in any event, I take your point and your concern.”

Cordray did, however, proceed to wave away the concern.  

“I have been appointed as director. There may be issues about that – I understand people have different points of view about that, But I now have legal obligations I’m supposed to carry out for this bureau. I am going to do that. We’re going to continue to walk straight ahead one step at a time to fulfill our legal responsibilities and that seems to me the best I can do at this point.”

Johanns fired a parting shot: “I’ve run out of time, but I’ll wrap with this: I can’t imagine how anyone can maintain, under the circumstances, that your appointment and your service is valid. And I can’t imagine then, based upon the precedent I see, how the actions you’re taking will be upheld. And I think that’s a very, very serious consequence for our nation.”   

Democrats on the committee fired back. Sen. Sherrod Brown (D-Ohio) told Cordray, a former Ohio state official: “I just simply can’t believe that we’re still having this debate.”

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Sen. Charles Schumer (D-N.Y.) noted that plans for a Republican boycott of the hearing fell through – and said that his Republican colleagues have “dialed down” their opposition because they have learned “it is on the wrong side of the issue” and have “given up the idea of mass reprisals” over the appointment. 

“It’s a losing fight politically for them,” Schumer said. “Many on the other side, wisely, don’t want to continue the fight, because they know it is on the wrong side of consumers.”

Schumer dismissed the opposition as “obstructionism.”

“We need to discuss these issues,” he said. “We don’t expect everyone to have the same views, but the idea about how to protect consumers should be on the table. The only way it can be on the table is for Mr. Cordray to be in his position. The president had no choice but to do what he did, because we can no longer have agencies closed down – not because people disagree about the views of the nominee, or anything else, but simply because they don’t want the agency to exist.”  

A lawsuit is expected to be filed to challenge the legality of Cordray’s appointment, which if upheld, would last only until the end of the current Congress.