Richard Cordray made his first appearance on Capitol Hill on Tuesday in his role as the new director of the Consumer Financial Protection Bureau, but his calm exchanges with Republican adversaries on the House Committee on Oversight and Government Reform contrasted sharply with the growing Republican chorus outside the hearing room that his appointment is unconstitutional.
The hearing, titled "How Will the CFPB Function Under Richard Cordray," may have assuaged some fears among Republican doubters that Cordray and his bureau will impose new and costly layers of regulation on nonbank lenders.
For example, when asked by South Carolina Republican Rep. Trey Gowdy whether consumers had some responsibility to educate themselves about loan risks, Cordray replied, "People have to be responsible for their decisions."
But he added that laws have to be as clear and transparent as possible.
Cordray’s response left a pleasantly surprised Gowdy to end the exchange with, "Let the record reflect that Mr. Cordray answered the question" -- a not so subtle reference to Cordray’s rejected predecessor, CFPB nominee Elizabeth Warren, who refused an answer to the same question, months before.
Cordray, a former Ohio attorney general and five-time Jeopardy champion, quoted Ronald Reagan in explaining his philosophy of financial regulation. "Free men," he said, "engaged in free enterprise build better nations, but free enterprise is not a hunting license."
He also told sub-Committee members that he plans to use, "all the tools that are available to us. Where we can cooperate we will, but we will not hesitate to use enforcement."
Cordray will have at his disposal quite an arsenal of enforcement: a 757-person bureau -- soon to grow to more than 1,200 by summer -- with a $300 million budget, responsible for overseeing everything from neighborhood credit unions to pay-day lenders.
Because the bureau is funded through the Federal Reserve, it is not subject to Congressional purse strings.
Cordray answered critics of his recess appointment by indicating that his intention is to carry out, "the law of the land as required."
But many Republicans reject the lawfulness of his appointment. On Monday, 26 Republican members of the House signed a letter to President Obama declaring that his recess appointment of Cordray is, "disingenuous." The letter stated, "That our Founding Fathers... would be shocked and dismayed by the utter disregard you have shown the Constitution and the United States Congress."
Also on Monday, Sen. Charles Grassley (R. IA) echoed that sentiment, calling President Obama's recess appointment of Cordray and three members of the National Labor Relations Board while Congress was in pro-forma session "blatantly unconstitutional." He said, "Where are the members who recognized that our sessions every three days rightly prevented President Bush from making recess appointments but who stand idly by as President Obama makes recess appointments without a recess?"
Grassley called upon the Senate, whose constitutional role includes advice and consent, to overturn the recess appointments, though he did not specify how. A spokesman for Grassley told Fox News that senators may discuss their options in that regard on Wednesday at a Senate Republican retreat at Mount Vernon.
It is widely expected that the recess appointments will also be challenged in court.