June 23, 2011

July 21 is the date the Consumer Financial Protection Bureau springs into being. But with each passing day, it’s becoming more and more likely that the bureau will begin life with limited powers because it won’t have a director.

Forty-four Senate Republicans signed a letter to President Obama threatening to block any nomination until Congress makes substantial changes to the new agency.

Senate obstructionism can cripple the effectiveness of the bureau. Without a director on July 21, the agency will not, among other things, be able to promulgate rules prohibiting “unfair, deceptive or abusive” credit practices or rules modernizing disclosure forms.

The president has been appropriately reluctant to use a recess appointment to bypass the Senate confirmation process. The bureau is an independent agency, and the director is appointed for a five-year term. Unlike traditional Senate deference to nominations for executive officers who serve at the pleasure of the president, the Senate has a legitimate and strong interest in carrying out its “advise and consent” role with regard to the bureau’s director.

But there is a way for Obama to respond to the pressing need to fill this position and to respect the Senate’s role in the confirmation process.

The president should make a recess appointment of Elizabeth Warren and simultaneously nominate Sarah Raskin for the same position.

During the July 4 Senate recess, the president may constitutionally exercise his recess appointment right and appoint Warren to begin serving immediately as the CFPB’s director. Warren is the perfect candidate to initially lead the agency. As the president’s adviser and the Treasury secretary’s designee, she has been in charge of bringing the bureau into being. She is the only person who could seamlessly take the reins.

Raskin is a natural successor. She is abundantly qualified for the position. It would be hard for Republican senators to argue that Raskin, as a recently confirmed Federal Reserve governor, is a bad-faith nominee.

Under this appoint-and-nominate strategy, Warren would serve as director until the Senate confirmed Raskin or, at the latest, when the current session of Congress expires at the end of 2012. (A disclosure: I have discussed with Warren and her staff the possibility of working for the bureau — but I have not discussed this strategy with her or anyone at the agency.)

While traditional recess appointments usurp the Senate’s advise-and-consent role, the “appoint and nominate” strategy would empower the Senate to end the recess appointment as soon as it wanted. Warren would, in effect, serve at the pleasure of the Senate.

Senate Republicans could still refuse to confirm any nominee until there was a structural overhaul of the bureau. But they could no longer use the threat of an emasculated agency to achieve that end.

To make clear that the president has the power to nominate (and that Warren would serve only until her successor was confirmed), Warren, at the time of her appointment, should send Obama a letter. Just as Justice Sandra Day O’Connor sent President George W. Bush a letter resigning “effective on the nomination and confirmation of my successor,” Warren could resign conditional on the confirmation of her successor.

The letter would also protect Warren’s independence. It would be understood that under no circumstances would she remain on the job after 2012. She wouldn’t be auditioning for a permanent nomination.

This constitutional three-step — a recess appointment, followed almost simultaneously by an O’Connor letter, followed almost simultaneously by a nomination — would ensure that the bureau has a director at its helm on July 21 and preserve the Senate’s advise-and-consent role.

It’s notable that the president can make recess appointments only if there is a recess. Over the Memorial Day holiday, Senate Majority Leader Harry Reid bowed to Republican pressure to forgo the traditional five-day recess by holding pro-forma sessions. But over the Fourth of July, Reid could empower the president to fill the CFPB chair by calling a short recess.

The “appoint and nominate” strategy flips senatorial incentives. Republican senators have already said that they will block a traditional nomination. By delaying confirmation, they could powerfully limit the CFPB’s powers. But with Warren filling the director’s seat by recess appointment, Republican senators would have a harder time ignoring a presidential nomination. Senators who would prefer a different director would be particularly motivated to vote to confirm a qualified alternative instead of allowing Warren to serve until the end of the 2012 congressional term.

Of course, by firing Warren from her recess appointment, the Senate might be indirectly creating a new colleague — as an unencumbered Warren might listen to the many voices urging her to run for Scott Brown’s Senate seat. The nation would be lucky to have a knowledgeable and even-handed architect of financial reform representing Massachusetts.

The writer is a law professor at Yale University.