Jon Chait explains the political strategy behind the "recess" appointment of Richard Cordray as leader of the Consumer Financial Protection Bureau.
Reuters looks at the Constitutional question of recess appointments.
...Section 1066 of Dodd-Frank provides that the Secretary of the Treasury is authorized to perform the functions of the CFPB under the subtitle transferring authority to the CFPB from the other agencies “until the Director of the Bureau is confirmed by the Senate in accordance with Section 1011.” It turns out that section 1011 is a defined term which provides: “The Director shall be appointed by the President, by and with the advice and consent of the Senate.”
This seems to suggest that even if the President might be able to appoint Cordray under the recess power the full grant of statutory authority wouldn’t transfer to the Bureau unless the statutory language was fulfilled as well.
This was mooted a year ago. The Inspectors General of the Treasury and the Federal Reserve prepared a report for Congress. The law firm of Ballard Spahr delivered the highlights, from which I excerpt this:
The designated transfer date (DTD) under the Dodd-Frank Act is currently set for July 21, 2011. Certain Bureau authority that can be exercised by Secretary Geithner (or his designee, Professor Warren) terminates on the DTD, and other authority terminates when a Bureau Director is appointed by the President and confirmed by the Senate. (Although the report does not directly address whether the President could make a recess appointment of a Director, without Senate confirmation, we note that his authority is not limited merely by the U.S. Constitution—as with other appointments—but also by the Dodd-Frank Act, which expressly speaks in terms of Senate confirmation.)
Under Section 1066 of the Dodd-Frank Act, after the DTD and before the confirmation of a Director, the Secretary (and his designee) can continue to exercise authorities transferred from other federal agencies, such as the authority to: (1) adopt regulations under the Truth in Lending Act (TILA) and other enumerated federal consumer financial laws; and (2) examine large depository institutions for consumer compliance. However, the Secretary and his designee cannot perform new functions during this period. For example, the report states that the Secretary (and any designee) may not during this period adopt rules prohibiting unfair, deceptive, or abusive acts or practices in connection with consumer financial products and services, or supervise or examine nondepository institutions. The report does not detail the full extent to which the Bureau can exercise its enforcement powers during this period, but, under the report’s logic, it appears that it could not bring an enforcement action based on its authority to prohibit unfair, deceptive, or abusive acts or practices.
Presumably someone who objects to a new rule will seek to have it overturned on this basis.