As
has been widely
reported , the D.C. Circuit
today ruled
unconstitutional the
president's power to make recess appointments. This is a good thing. The ruling
draws into question not only draws into question the National Labor Relations
Board's power but also draws into question the regulatory powers of the
Consumer Financial Protection Bureau because its current directors, Richard
Cordray, was a recess appointment. This is a bad thing — a very bad thing.

The CFPB was not given its full
powers until the president appointed its director. Thus, to the extent the D.C.
Circuit's ruling calls into question Cordray's recess appointment — and it is
difficult to see how it does not — then the CFPB's post-creation regulatory
and enforcement actions may all be a nullity. All of these actions might have
to start over from scratch. I suppose the CFPB might be able to get appellate
review of the issue in a different court of appeals. The D.C. Circuit's ruling,
however, already created a circuit split with the 11th Circuit. The issue seems
a likely one for the Supreme Court to take.

Because of the era in which we
live, today's ruling will be interpreted primarily through a political lens.
The NY Times headline
currently reads, "Obama Recess Appointments Are Blocked By Court." It
is probably not entirely coincidental that a Republican panel on the D.C.
Circuit found President Obama lacked authority to issue these recess
appointments, while the 11th Circuit was more sympathetic to President George
W. Bush's power to make a judicial recess appointment (although that court was
roughly split between Demorcrat- and Republican-appointed judges). With the
current political configuration, the decision is a short-term victory for corporate
America as it provides a tool to battle regulations designed to protect workers
and consumers.

In the long run, however, we
are probably best rid of recess appointments. Rather than an uncommonly used
device to deal with emergency situations that might arise, recess appointments
have become a routine tool that both Democratic and Republican presidents have
used to bypass the Senate. Because senators know the president can use a recess
appointment to avoid the consequences that Senate obstinacy might create,
senators are emboldened to create gridlock in presidential nominations. In the
short term, the constitutional cloud hanging over recess appointments will
probably lead to more pain as political gridlock causes important government
functions to go undone. In the long run, however, these problems should create
pressure to fix the gridlock and fix the problems rather than sidestepping them
through recess appointments.

For more analysis on what
today's ruling means for the Cordray nomination, Carter Dougherty has been on
top of the story over at Bloomberg here and here.