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September 24th, 2010


By Nathan Tucker
Last Friday, President Obama appointed Harvard law professor Elizabeth Warren to oversee the creation of the new Consumer Financial Protection Bureau (CFPB).  The Bureau, part of the financial regulatory overhaul bill passed in July, is tasked with the responsibility to prevent abusive and deceptive practices in the mortgage and credit card industries.

Warren, the current chair of the congressional panel overseeing TARP and a rumored future Supreme Court nominee, will oversee an agency whose budget could be as large as $500 million.  Treasury Secretary Timothy Geithner has set July 21, 2011, the one-year anniversary of the signing of the financial regulatory bill, as the target date for when the creation of the new agency would be completed.

Warren assumes her new “interim” position, which ostensibly ends next July 21st, without going through the Senate confirmation process.  Such constitutional shenanigans had initially caused Chris Dodd (D-Conn), the current chair of the Senate banking committee, to threaten to defund the agency if Warren was appointed to lead it, even on an interim basis.  After Obama made the appointment, however, Dodd issued a statement praising Warren as a “strong, qualified, and terrific watchdog.”

Representatives Darrell Issa (R-CA), the ranking member of the House Committee on Oversight and Government Reform, and Spencer Bachus (R-AL), the ranking member of the House Financial Services Committee, showed more fortitude, demanding that the White House detail Warren’s specific responsibilities and supervisory authority, which agency will pay her salary, and where she will file her financial disclosure statement.

In their letter to White House Counsel Robert Bauser, they wrote that Obama “is undermining Congressional oversight while giving her substantive authority over the CFPB.  This is unprecedented…For the next ten months, it appears the CFPB will exist in a murky status that seems designed to obstruct Congressional and public scrutiny of its operations.”

The White House hopes to avoid the “advice and consent” role of the Senate by naming Warren as “special advisor” to both the President and the Treasury Secretary.  Better known in public parlance as czars, the first “special advisor” occurred when Woodrow Wilson appointed financier Bernard Baruch to head the War Industries Board, a position dubbed industry czar.

Franklin Roosevelt created a dozen such czars during his presidency, and modern presidents since Richard Nixon have made increasing use of the position to place loyal, and at times controversial, supporters among career bureaucrats to ensure that the administration’s policies are carried out.

With the recent addition of Warren and the Asian tarp czar, John Goss, the total number of current czars comes to 43.  The large number of czars appointed by President Obama, particularly this early in his administration, led Senator McCain (R-AZ) to tweet last year that Barack Obama has more czars than the Romanovs, the Russian imperial family, ever did.

The problem is that Section 2 of Article 2 of the Constitution allows the president to appoint officers of the United States only with the advise and consent of the Senate.  As the Department of Justice noted in 2007, a federal “officer” under this constitutional provision, commonly referred to as the Appointments Clause, is one who “is invested by legal authority with a portion of the sovereign powers of the federal Government.”

The DOJ memo defined the term “sovereign powers” as the authority to bind “the Government or third parties for the benefit of the public, such as by administering, executing, or authoritatively interpreting laws.”

Most presidents make the theoretically plausible, but practically dubious, claim that their czars do not satisfy this definition because they are merely advisers who lack any decision-making powers.  Not so in the case of Warren’s appointment to lead the creation of the new consumer protection agency.

As President Obama noted when he named her as the interim head of the CFPB, “she will help oversee all aspects of the bureau’s creation, from staff recruitment to designing policy initiatives to future decisions about the agency.  She will have direct access to me and to Secretary Geithner, and she will oversee a staff [of 30-40] at the Treasury Department that has already begun to work on this task.”

This isn’t the definition of a mere adviser offering her opinion to duly confirmed executive officials, but the job description of one who has the authority and discretion to make administrative and policy decisions on behalf of the federal government.

Unfortunately, the same can be said about a great many of the administration’s unconfirmed czars.  It is long past due for Congress to reassert its rightful role of “advise and consent” by demanding specific job information for each czar.  If such information is withheld by the White House, or it turns out that the czar is in fact an “official” under the Appointments Clause, Congress should not hesitate to defund the agency.

It is time to restore checks and balances to the appointment process, and to place the selection of policymakers in the hands of duly-elected representatives of the people.

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About the Author

Nathan W. Tucker

Nathan W. Tucker is a Davenport attorney and author of We The People: The Only Cure to Judicial Activism. He can be contacted at [email protected]

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