The Recess: Appeals Court Dings Obama Appointments

In a much-noted decision, a panel of the D.C. Circuit (Judges Sentelle, Henderson and Griffith) has invalidated President Obama’s putative “recess” appointments to the National Labor Relations Board (NLRB). The appointments were made—without the advice and consent of the Senate—on January 4, December 2012, when the Senate was meeting in pro forma sessions (and even conducted official business), precisely for the purpose of blocking recess appointments.

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Unforced Error

My earlier posts on Dodd-Frank contain a bad mistake that requires correction before it turns into an urban legend. In Free Enterprise Fund v. Public Company Accounting Oversight Board (2010), I wrote, the Supreme Court invalidated an arrangement under which officers of the PCAOB, an agency housed in and under the SEC (an independent agency), enjoyed “double-layer” protection against removal: the President (the Court stipulated) could not fire SEC Commissioners except for good cause, and the SEC could not fire PCAOB officers except for good cause. So far, so accurate. Dodd-Frank’s Bureau of Consumer Financial Protection (CFPB) is an independent agency nested “in” another independent agency (the Fed), just like the PCAOB. Also correct. However, as “Admin Guy” notes in his comment, the CFPB’s Director, unlike the PCAOB’s members pre-Free Enterprise Fund, does not enjoy double-layer protection: he is removable, “for cause,” by the President. That is so, and my statement to the contrary was wrong.   Apologies for the embarrassing error (all the more idiotic because I quote and cite the pertinent provision before ignoring it), and thanks for the correction.

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The Revenge of Richard Nixon: The Consumer Financial Protection Bureau Spreads Its Tentacles

Last month marked the one-year anniversary of the Consumer Financial Protection Bureau (CFPB).  At the time the Bureau was created I predicted that it would be a bureaucratic train wreck: an institution that is almost perfectly designed to manifest all of the worst pathologies that scholars of regulation have identified over the past several decades.  Unfortunately, its operations to date have confirmed those fears.

The institutional structure of the CFPB is novel in American history—not merely an independent agency, it is an independent agency tucked inside another independent agency (the Federal Reserve).  Its decision-making is not only independent of any review by the President or Congress, but also from the Federal Reserve itself. 

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