In the past few weeks the Consumer Financial Protection Bureau (CFPB) put in place over 3,500 pages of new regulations to implement various provisions of the Dodd-Frank Act. Or, maybe they didn’t.
Yesterday the D.C. Circuit of the Federal Court of Appeals issued a ruling that the President can make recess appointments only when the Senate has formally adjourned between sessions of Congress. If the ruling stands, various appointments, including President Obama’s recess appointment of Richard Cordrey, would be thrown into question.
If Mr. Cordrey’s appointment is overturned, then all of the recently published rules may be overturned. I can hear the cheers going up across the land. Compliance Officers are dancing in the street.
But wait. Remember that the sections of the Dodd-Frank that were implemented through the recent regulations were scheduled to go into effect immediately if the regulations were not published by January 21st. Mr. Cordrey and various other members of the CFPB staff were at their desks last Sunday to complete the job by the deadline so that would not happen.
If the regulations are overturned then those massive provisions of Dodd-Frank are in effect now. Those of you with Saturday banking hours may be creating violations at this very moment. Hey, what happened to those cheers?
So what do we do? We wait. The White House will likely appeal the decision. The Supreme Court will then take up the matter. There is no way to predict how long that may take. Mr. Cordrey’s recess appointment expires at the end of this year. Last Thursday President Obama renominated Mr. Cordrey to a five-year term as the head of the CFPB. It is unlikely that Congress will vote on that appointment any time soon.
Hopefully the regulatory agencies will provide interim guidance for financial institutions. Unless we are informed otherwise, it is best to assume the regulations are valid and on tract to take effect, for the most part, in January 2014. The alternative is too ghastly to consider.
The original draft of this article contained a long harangue on the continued gross incompetence of the U.S. Federal Government, but I decided to spare you from a long discussion of something so obvious. I hit the delete key.