Law and regulation Court Ruling May Force Deal on CFPB Structure A ruling by a federal appeals court last week that President Obama acted improperly in recess appointing members of the National Labor Relations Board may encourage Democrats to cut a deal on the structure of the Consumer Financial Protection Bureau. January 28

WASHINGTON — Rep. Jeb Hensarling, R-Texas, chairman of the House Financial Services Committee, said Monday that the panel will not accept testimony from Consumer Financial Protection Bureau Director Richard Cordray on the agency's semi-annual report, arguing that Cordray was not legally appointed to the position.

A federal appeals court in January invalidated several recess appointments President Obama made to the National Labor Relations Board on the same day Cordray was appointed as the head of the CFPB. Cordray was not involved in the lawsuit, but the court decision has raised numerous, ongoing questions about the legality of his position. Senate Republicans are pushing for several key changes to the agency in exchange for a Cordray confirmation vote, including establishing a bipartisan commission structure at the agency.

Building on the controversy, Hensarling is now arguing that the banking panel "cannot legally accept testimony" from Cordray on the agency's semi-annual report to Congress because of the uncertainty over his position. The CFPB issued its report late last month.

"The court's unanimous ruling makes it clear that there is no legally-appointed director of the CFPB at this time," said Hensarling in a press release. "By law, the committee can receive this testimony only from a director who is appointed in accordance with the Constitution and the Dodd-Frank Act, which created the bureau."

Cordray is scheduled to discuss the semi-annual report with the Senate Banking Committee on Tuesday.