Stymied by Congress, Obama to boldly seat nominees

Obama's going to get some flack for this...

(And of course if it were a Republican President stymied by a Democrat Congress, you can bet the headline would say "unjustly" instead of "boldly."

From Yahoo News: Stymied by Congress, Obama to boldly seat nominees
WASHINGTON/CLEVELAND (Reuters) - A defiant President Barack Obama on Wednesday took his boldest action yet to show voters he will confront Republicans, announcing he will bypass Congress and install nominees into politically sensitive jobs overseeing consumer lending and the labor force.

Obama will make recess appointments placing Richard Cordray in charge of the new Consumer Financial Protection Bureau and to fill three vacancies on the National Labor Relations Board.

The nominees were all facing drawn-out Republican opposition.

The moves sharply escalate an election strategy he kicked off last year of going around Republicans to get things done, tapping into voter hostility toward a gridlocked Congress and hardening the tone of his campaign to win reelection in November.

The announcement incensed Republicans who called the moves unprecedented and portrayed them as possibly illegal because the appointments were made while the Senate is still technically in session.

"This is an extraordinary and entirely unprecedented power grab by President Obama," House Speaker John Boehner said in a statement. "I expect the courts will find the appointment to be illegitimate."

The Republican reaction highlights the strategy's risks.

It could so antagonize Obama's opponents that it will scupper any prospect of legislative compromise on pressing issues like extending a payroll tax cut for 160 million Americans.

The White House acknowledged that risk, but was confident the American public would be swayed far more by his action of rising above a dysfunctional Congress.

Senate Republicans on Wednesday said they were not yet sure how or if they would retaliate.

"Beyond the legal ramifications of trampling on the United States Constitution, not sure yet," said one Senate Republican leadership aide, when asked about the potential fallout.

Another senior Republican aide said it was unlikely that the appointments would be a setback to upcoming efforts to extend a payroll tax cut through December. The aide, who asked not to be identified, said Republicans were intent on getting that measure extended beyond a February 29 expiration enacted at the end of last month.

Republicans are, however, likely to now block Obama's picks for other high-profile financial regulators, with vacancies at the Federal Reserve and the Office of the Comptroller of the Currency.

This would leave the White House to decide whether to simply appoint them as well or leave key agencies without confirmed leaders for at least another year.

HOLDING NOMINEES HOSTAGE

On Wednesday the president made a show of his decision to appoint Cordray, a former Ohio attorney general who frequently took on big banks. Obama travelled to Cleveland and announcing the recess appointment in a campaign-style rally at a high school gym in a Cleveland suburb.

Last month, Republicans blocked a vote on whether to confirm Cordray.

"We know what would happen if Republicans in Congress were allowed to keep holding Richard's nomination hostage. More of our loved ones could be tricked into making bad financial decisions," Obama told a cheering crowd.

The Consumer Financial Protection Bureau (CFPB) was created by the 2010 Dodd-Frank financial oversight law, enacted in response to the 2007-2009 financial crisis, to police the market for consumer products such as credit cards and mortgages.

Democrats have heralded the bureau, which opened its doors in July, as a way to protect consumers from abusive lending practices like the type of home loans that were made in the years leading into the financial crisis.

Republicans have charged the agency is a virtually unchecked government body that will hurt lending and put small banks out of business.

Later in the day the administration announced Obama would use recess appointments to install Sharon Block, Terence Flynn and Richard Griffin at the NLRB after the Senate failed to move on them. That had left the five-member board without enough representation to fully conduct its business in 2012.

NOT SHY ABOUT TAKING ON A FIGHT

Hammering populist themes that show him to be a champion of the middle class, aides say, the president will keep taking steps to show voters he will make moves on his own to help the economy if Congress refuses to act.

Before delivering his speech, with Cordray at his side, Obama stopped in a snow-covered working-class neighborhood to meet an elderly couple who had almost lost their home when a mortgage broker took advantage of them.

"It's a good example of the trickery and abuse in the non-bank financial sector that we're going to be able to do something about," Obama said as they sat around the dining room table in a modest two-story house with peeling paint.

Republicans have made clear they do not oppose Cordray but want changes made to the bureau's structure before they allow the Senate to confirm anyone to lead the CFPB.

As attorney general, Cordray was not afraid to file legal challenges against banks, including Bank of America Corp. The banking industry and Wall Street are worried about how the bureau will crack down on lending practices.

"You've got someone who is not shy about taking on a fight," Ed Mills, a financial stock analyst at FBR Capital Markets & Co, said of Cordray.

Some analysts said Cordray's appointment may not have an immediate impact on the lending industry.

They said much of the bureau's time over the next year, whether Cordray was in the director's chair or not, would be spent building up its operations.

"I don't think this changes much at the CFPB because the agency is going to be overwhelmed in 2012 with Dodd-Frank rulemakings and setting up and strengthening its bank supervision program." said Jaret Seiberg, policy analyst at Guggenheim Securities.

Cordray's appointment will, however, allow the bureau to begin focusing on lenders outside the banking industry.

Under the Dodd-Frank law, without a director in place the CFPB can supervise banks but it cannot regulate the "shadow banking" industry such as payday lenders and certain student loan providers.

RECESS OR NOT A RECESS

Republicans are portraying the appointments as possibly illegal, but the White House said its lawyers believe the move is allowed under the constitution.

David Hirschmann, an official at the U.S. Chamber of Commerce, told Reuters the group would not dismiss the option of a lawsuit.

At issue is what authority Obama has to put Cordray in the job.

The president has the authority to make such a move when the Senate goes on a recess. Republicans, however, have forced the Senate to technically stay in session to try to prevent Obama from making such a move.

Republicans contend that because of these pro-forma sessions, no recess appointments can be made, a view the White House is now challenging by installing Cordray as director of the CFPB.

Democrats said Republicans forced the president to make the move by blocking a vote on Cordray.

Barney Frank, the lead Democrat on the House Financial Services Committee and co-author of Dodd-Frank, said "Republicans' complaints about the President's decision to make this recess appointment are equivalent to objections leveled by arsonists at people who use the fire door to escape a burning building."



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