C. Boyden Gray, one of the attorneys who helped bring the case, said the labor case still had a ways to go.
“This is not the final word,” Gray, who served as legal counsel to President George H.W. Bush from 1989 to 1993. “It will go to the Supreme Court.”
Gray called today’s ruling “helpful” in the context of his lawsuit, though not necessarily decisive. “We’re challenging the entire structure of the CFPB. We’re challenging its ability to do everything that it’s doing,” he said.
The case brought by Gray faces other hurdles. The Obama administration has argued that the Texas bank has no standing to bring the case because it has not been affected by CFPB actions.
The question of what is left of the CFPB’s work over the last year could become the subject of complicated parsing by the courts, Natter and Gupta said. One legal doctrine holds that the actions of invalid appointees can be preserved to avoid chaos in a regulated market.
Previous regulatory action would probably survive under that doctrine while companies facing current enforcement action could raise Cordray’s status as a defense.
“This really throws a wrench into pending enforcement proceedings,” Gupta, now a partner with Gupta Beck PLLC in Washington, said.
Congressional Republicans immediately seized on the labor case as a reason why Cordray’s appointment was not legal.
“This decision now casts serious doubt on whether the president’s ‘recess’ appointment of Richard Cordray to the Consumer FinancialProtection Bureau, which the President announced at the same time, is constitutional,” Senate Minority Leader Mitch McConnell of Kentucky, said in an e-mailed statement.
Mark Calabria, a former Senate Republican staffer, said the NLRB would probably have the ripple effect of stalling any progress Cordray makes in the Senate after his renomination. They would also embolden Republicans in their quest to change the law.
“How can you have a confirmation process if a court has said he’s been unconstitutionally appointed?” Calabria, director of financialregulation studies at the Cato Institute in Washington, said in an interview.
White House press secretary Jay Carney said the ruling affects only the NLRB case and “has no bearing on” the president’s recess appointment of Cordray.
He said the ruling was “novel and unprecedented” and contradicts 150 years of practices by Democratic and Republican administrations. “The court decided a case brought by a specific company and the decision applies to that case. It does not apply more broadly than that.”
The decision also comes at a moment of leadership change at the upper levels of CFPB. Raj Date, the bureau’s deputy director, is scheduled to leave on Jan. 31. No replacement has been named.