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From Banking and Finance Law Daily, May 20, 2013

Johanns Renews Call for Cordray Resignation

By Andrew A. Turner, J.D.

Senator Mike Johanns (R-Neb) has called on Richard Cordray to resign his position as Director of the Consumer Financial Protection Bureau, following a second U.S. Court of Appeals ruling that President Obama’s attempted recess appointments of National Labor Relations Board members were constitutionally invalid. Although the cases only addressed the NLRB appointments, the Cordray appointment was made under similar circumstances. In a recent opinion, the U.S. Court of Appeals for the Third Circuit found that an NLRB panel lacked the requisite number of members to exercise the NLRB’s authority because one panel member was invalidly appointed during an intrasession break.

Johanns said that actions of the CFPB are likely void and subject to litigation because of the findings that the appointments were unconstitutional. To minimize the practical complications resulting from decisions made without appropriate authority, Johanns asked for Cordray to immediately step aside.

In a letter to Cordray, Johanns expressed concern that rules put in place by the CFPB will be invalidated, resulting in compliance costs and customer confusion. “For example, a customer whose mortgage was originated after January 21, 2012 may now be subject to wholly unnecessary litigation risk were the Supreme Court to strike down the Ability to Repay/Qualified Mortgage Rule,” finalized during Cordray’s tenure, according to Johanns.

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