This story appeared in Bank Digest.
A divided panel of the U.S. Court of Appeals for the Third Circuit has ruled in NLRB v. New Vista Nursing and Rehabilitation that a National Labor Relations Board panel lacked the requisite number of members to exercise the NLRB's authority because one panel member was invalidly appointed during an intrasession break. This latest ruling, along with the Jan. 25, 2013, decision by the U.S. Court of Appeals for the District of Columbia in Noel Canning v. National Labor Relations Board, as well as the Obama Administration's petition for certiorari with the Supreme Court seeking reversal of the D.C. court's decision, further clouds the January 2012 recess appointment of Richard Cordray as Director of the Consumer Financial Protection Bureau and the actions taken by the bureau during Cordray's recess appointment.
Sen. Mike Johanns (R-Neb.) responded to the ruling by calling on appointed NLRB and CFPB members "to immediately vacate the offices." Johanns also sent letters to the appointees. Although Johanns projected that as a result of the ruling the actions of the NLRB and CFPB "are likely void and subject to litigation," a report by the Congressional Research Service noted that if a court invalidated Cordray's recess appointment and determined that every rulemaking and enforcement action conducted under the direction of Cordray was done without proper legal authority, that does not necessarily mean those actions are void. The report went on to say that "many of the substantive actions taken while Cordray was at the helm were exercises of transferred authorities that the [Treasury] Secretary could have authorized had he been serving as interim director pursuant to [Dodd-Frank Act] section 1066(a)" and the Treasury Secretary may be permitted to validate some of the bureau's past actions through the doctrine of ratification.