House Financial Services Committee refuses to allow CFPB Director to testify

Richard Cordray, director of the Consumer Financial Protection Bureau, is being barred from testifying before the House Financial Services Committee until he is confirmed by the Senate.

Committee Chairman Rep. Jeb Hensarling (R-Tex.) sent a letter to the consumer bureau on Monday saying Cordray’s recess appointment places his authority in question.

In January, a federal appeals court ruled that President Obama’s recess appointments to the National Labor Relations Board were unconstitutional and therefore invalid. That ruling was not directly related to Cordray, but essentially invalidates his appointment as well, said Hensarling.

“The court’s unanimous ruling makes it clear that there is no legally appointed director of the CFPB at this time,” Hensarling said in a statement. “By law, the committee can receive this testimony only from a director who is appointed in accordance with the Constitution.”

Cordray was supposed to appear before the financial services committee in the coming weeks to testify about the CFPB’s semiannual report to Congress. He is still scheduled to appear before the Senate banking committee on Tuesdayto discuss the report. The director and his staff have testified before lawmakers 32 times, including several times before Hensarling’s predecessor Rep. Spencer Bachus (R-Ala.).

Officials at the CFPB acknowledged receiving Hensarling’s letter. Bureau spokeswoman Moira Vahey stressed, “The CFPB is not a party to the [federal case], and that ruling has no direct effect on the Bureau.”

The committee’s ranking Democrat, Rep. Maxine Waters (Calif.), disagreed with Hensarling’s decision to bar Cordray from testifying.

“Hensarling’s own letter concedes that no court has addressed the legitimacy of the President’s appointment of Richard Cordray,” Waters said in a statement. Hensarling should “allow the director to appear before the committee to deliver his report as required by law.”

Hensarling’s move is the latest in an ongoing fight over the structure of the watchdog agency. Senate Republicans have refused to confirm Cordray for nearly two years, demanding that the CFPB be subject to annual appropriations and led by a five-member board for greater accountability.

Senate Democrats have thrown their full support behind Cordray and keeping the current structure of the bureau intact. Democrats pushed Cordray’s nomination through the Senate banking committee by a slim 12-10 margin last month. But with neither side willing to compromise on the structure of the bureau, Cordray’s confirmation remains in limbo.

Danielle Douglas covers the banking industry for The Washington Post.
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