January 4th, 2012
11:55 AM ET
WASHINGTON (CNNMoney) - In a move that has angered Republicans, President Obama is expected on Wednesday to make a recess appointment of Richard Cordray to be the first director of the Consumer Financial Protection Bureau, sidestepping the Senate confirmation process, a senior administration official tells CNN.
The president is expected to make the official announcement at a 1:15 p.m. ET speech in Ohio, where Cordray served as attorney general.
Last month, the Senate failed to muster enough votes to take up confirmation of Cordray to run the consumer bureau, with all but one Republican voting against the move. At the time, President Obama hinted that was considering such a recess appointment.
News of the impending recess appointment spurred a flurry of angry statements from GOP leaders who have been trying to block a recess appointment for more than seven months.
"President Obama, in an unprecedented move, has arrogantly circumvented the American people by 'recess' appointing Richard Cordray as director of the new CFPB," said Senate Minority Leader Mitch McConnell in a statement.
At stake are vast new powers the Consumer Financial Protection Bureau can't wield without a director. For example, the bureau can't regulate financial products from non-banks, including student loan providers, debt collectors, payday lenders and check cashers.
Without a chief, the bureau also can't regulate mortgage originators and servicers, which played a big role in the financial crisis by providing subprime mortgages to families who couldn't afford them.
The move has sharpened tension between the White House and Republicans, who have vowed since May to block confirmation of any director unless they get structural changes to the bureau, which was formed as part of the Wall Street reform law passed last year.
Republicans had been using a little-known procedure to keep the Senate in session - even as it wasn't really conducting any business - in order to stop the president from making recess appointments. Their basis for the move comes from a non-binding Department of Justice brief from 1993 that states Congress should be in recess for more than three days before the president makes an official recess appointment.
Until now, Obama has not tried to challenge the GOP's effort to block his recess appointments. However, legal experts have said they believed Obama had the authority to make such a recess appointment despite Congressional attempts to block him.
GOP leaders say they don't think Obama has the power to make a recess appointment, given their moves. Senate Minority Leader Mitch McConnell said Cordray's appointment is on "uncertain legal territory," in a statement.
And House Speaker John Boehner went a step further stating he expects "courts will find the appointment to be illegitimate," in a statement.
Republicans say their objection to Cordray's nomination has nothing to do with the nominee.
Instead, they want three big changes to how the bureau is overseen. They want to replace the director with a board; make the bureau ask Congress for money each year; and gain more power to overrule the bureau.
–CNN's Adam Aigner-Treworgy contributed to this report.
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