Holes are being filled in the story of the controversial appointment of Rich Cordray as director of the new Consumer Financial Protection Bureau (CFPB)

The new director himself has wasted no time getting to work after waiting nearly six months for the opportunity.  He immediately released a post on the CFPB website in which he summarized the work the headless agency has accomplished over the past six months and an explanation of why the absence of a director was handicapping it.  "In particular," he said, "we lacked the ability to supervise financial institutions other than big banks - like nonbank mortgage lenders and servicers, and payday lenders. Many of these institutions had no regular federal oversight in the run up to the financial crisis. They led a race to the bottom that pushed aside responsible businesses, including community banks and credit unions, and greatly harmed consumers.  We can now exercise the full authorities granted to us under the law and begin to supervise these nonbanks." 

This morning the Bureau, along with a rather unassuming little video in which Cordray invites consumers to tell the agency their stories and ask for help where needed, CFPB announced the formal launch of the non-bank supervision program Cordray alluded to on Wednesday.  Oversight has, until now, been under state and local supervision which ranges from rigorous to non-existent which means that the most egregious practitioners of consumer abuse flock to the states on the low end of that scale.

CFPB will begin this supervision in phases with certain markets, i.e. mortgage companies (originators, brokers, servicers, loan modification and foreclosure relief servicers) payday lenders and private education lenders falling under the regulations immediately.  For other businesses such as debt collection, credit reporting, auto financing and money services, CFPB may opt to supervise only "larger participants" once that term is defined.  This has already been the subject of public comment and the Bureau has received thousands from trade and consumer groups and various other regulators.

The Dodd-Frank Act also gives CFPB authority to supervise any nonbank that it has a reason to determine is engaging or has engaged in conduct that poses risks to consumers with regard to consumer financial products or services. The CFPB will be publishing rules setting out procedural guidelines for implementation of this provision.

In the meantime the controversy over Cordray's appointment itself is roiling Washington.  President Obama first nominated Cordray, former Attorney General of Ohio and CFPB's director of enforcement on July 17.  He was chosen after Senate Republicans made it clear that they would not confirm the appointment of Elizabeth Warren who had conceived the idea of the Bureau and might not confirm anyone at all based on their objection to the existence of the CFPB itself despite its authorization by the Dodd-Frank Wall Street Reform Act.

Cordray's name has never been brought to an up or down vote but in the current Senate, where a 60 vote majority is now required to bring any bill to the floor, he did receive a simple majority in the "cloture" vote.  Tapes are now endlessly running on television with Republicans explaining at that time that, while Cordray was more than qualified, no one would be acceptable for the position.

A recess appointment is set out in the Constitution for periods when Congress is not in session and it has been widely used throughout history.  Obama has used it 31 times in three years (four of these occasions occurred yesterday as he appointed three people to the National Labor Relations Board who had also been waiting for months, leaving the Board without a quorum).  Reagan used the device 243 times, George H.W. Bush 77, Clinton 171, and George W. Bush 171.

Republicans however, charge that this was a grab for power.  Even though the Senate sort of recessed on December 22, as they have over the last few vacations they have continued to hold sessions every few days in which a Senate member gavels an empty chamber to attention, declares Congress open for business and adjourns seconds later.  The sole reason for this is to deter presidential recess appointments. 

It may well be that this somewhat minor appointment may be headed for a major court battle - and the intriguing part is that almost any citizen can start it.  According to some legal authorities, anyone who can claim injury from any action taken by CFPB after this appointment can challenge the legality of the Bureau's action on the basis that its Director is an illegal appointment.

More fun and games for election year.