Stirring up a fight, Obama names consumer watchdog

Stirring up a fight, Obama names consumer watchdog

President Barack Obama shakes hands with Richard Cordray before speaking about the economy, Wednesday, Jan. 4, 2012, at Shaker Heights High School in Shaker Heights, Ohio. In a defiant display of executive power, President Barack Obama on Wednesday will buck GOP opposition and name Cordray as the nation's chief consumer watchdog. Outraged Republican leaders in Congress suggested that courts would determine the appointment was illegal.

SHAKER HEIGHTS, Ohio (AP) -- Defying Republican lawmakers, President Barack Obama on Wednesday barreled by the Senate and installed a national consumer watchdog on his own, provoking GOP threats of a constitutional showdown in the courts. Setting a fierce tone in the election-year fight for middle-class voters, Obama said: "I refuse to take `no' for an answer."

Obama named Richard Cordray, a respected former attorney general of Ohio, to be the first director of the Consumer Financial Protection Bureau after giving up on hopes for a confirmation vote in the Senate. The appointment means the agency is able to oversee a vast swath of lending companies and others accused at times of preying on consumers with shady practices.

In political terms, Obama's move was unapologetically brazen, the equivalent of a haymaker at Republicans in the Senate who had blocked his nominee. Acting right after Tuesday's presidential caucuses in Iowa, which showered attention on his opponents, Obama sought to make a splash as the one fighting for the rights of the little guy.

Presidents of both parties long have gotten around a stalled confirmation by naming a nominee to a job when the Senate is on a break through a process known as a recess appointment.

But Obama went further by squeezing in his appointment during a break between rapid Senate sessions this week, an unusual move that the GOP called an arrogant power grab.

The White House said what the Senate was doing - gaveling in and out of session every few days solely to avoid being in recess - was a sham. Obama's aides said the president would not be stopped by a legislative gimmick, even though it was Senate Democrats who began the practice to halt President George W. Bush's appointments.

"When Congress refuses to act, and as a result hurts our economy and puts people at risk, I have an obligation as president to do what I can without them," Obama said from Ohio, a state vital to Obama's re-election bid.

Consumer groups hailed Obama's decision; the U.S. Chamber of Commerce balked and warned it was so legally shaky that the consumer bureau's work may be compromised.

The response from Republicans was blistering.

The top Senate Republican, Minority Leader Mitch McConnell, said Obama had "arrogantly circumvented the American people" and endangered the nation's systems of checks and balances. Republican Sen. Orrin Hatch of Utah called it a "very grave decision by this heavy-handed, autocratic White House."

And House Speaker John Boehner, R-Ohio, said: "It's clear the president would rather trample our system of separation of powers than work with Republicans to move the country forward. This action goes beyond the president's authority, and I expect the courts will find the appointment to be illegitimate."

Mitt Romney, a leading Republican presidential candidate, accused Obama of displaying "Chicago-style politics at its worst."

It was not immediately clear who might file a suit on the matter. Most likely, a private party regulated by the consumer agency would have the legal standing.

More than a standoff over one significant appointment, the fight speaks to the heart of a presidential campaign under way.

Obama is presiding over a troubled but improving economy. To try to win over voters, he is employing two strategies: in-your-face politics against a Congress held in low public regard, and a campaign pitch that he would represent the crunched middle class better than any of the Republicans he would face.

The Cordray appointment fits both.

Only with a director in place can the consumer bureau keep "dishonest" mortgage companies, payday lenders, debt collectors and others from harming consumers, Obama said. Speaking from a high school in the Cleveland suburb of Shaker Heights, Obama said Republicans were only blocking Cordray because they wanted to water down consumer protections.

Republican senators have called the consumer bureau too powerful and unaccountable, and held off on Cordray's bid as a means to get changes.

Cordray essentially starts right away, although his nomination will become official later in the week, the White House said. He is expected to serve until at least the end of 2013, which is the end of the Senate's next session.

In plowing ahead, the White House had to contend with some uncomfortable history.

Just last year, a lawyer from Obama's Justice Department said the office's view was that recess appointments could only come during legislative breaks of more than three days. That doesn't match up with what Obama did with Cordray, since the Senate was technically just in session on Tuesday.

The Senate's top Democrat, Harry Reid of Nevada, said in 2007 he would keep the Senate in "pro forma" sessions to block Bush from making an end run around the Senate and the Constitution with controversial nominations. That's exactly what Obama's White House now calls a gimmick. Yet on Wednesday, Reid came out in support of what Obama did.

As a senator in 2005, Obama opposed the recess nomination of John Bolton to be the U.S. ambassador to the United Nations, saying at the time that a representative who couldn't get through a Senate confirmation would be "damaged goods" with less credibility. Obama spokesman Jay Carney said Obama was just talking about the merits of the Bolton pick.

Obama certainly hasn't opposed recess appointments as president.

He had made 28 recess appointments before Wednesday, then named Cordray and three members to the National Labor Relations Board.

Bush made more than 170 such appointments when the Senate was away.

At the heart of the conflict this time is the arcane matter of what, exactly, constitutes a congressional recess.

White House lawyers ultimately determined that, for all practical purposes, the Senate is in the midst of about a monthlong break and Obama can move ahead as he pleases.