President Obama's recess appointment today: Why there'll likely be no legal challenge

[ProgressiveEconomist]

The USSC historically has shunned hands-on direct resolution of disputes between the Executive and Legislative branches of government. In the case of President Obama's recess appointment of Richard Cordray to head the Consumer Financial Protection Bureau, there are potential plaintiffs available (other than Senate Republicans) who clearly have "standing" to sue. Any lawsuit likely would be brought by somebody who's losing million$ because Cordray's rules depress business. Shepherding a Federal case through lower courts and up to the USSC isn't cheap. (See the recent GD thread at http://www.democraticunderground.com/1002119693 for more background on today's Presidential action.)

IMO, the biggest losers from today's recess appointment to the CFPB are payday lenders who charge poor suckers an average of 400 percent interest on typical loans. Right now, the Feds cannot regulate these loan-sharks. Recent research by respected economists (see the Slate.com story at http://www.slate.com/articles/business/the_dismal_science/2009/07/400_percent_apr_is_that_good.single.html ) found that strong disclosure rules would depress the payday loan business by 10 percent. Rules that capped interest rates at, say, 36 percent, would virtually put payday lenders out of business.

IMO, the more daylight that is shone on the payday lending business, the more and more severe will be restrictions imposed on it. Already, Ohio state legislation and the Military Personnel Act have capped payday lenders' APRs at 28 percent and 36 percent, respectively.

Dozens of other states well might follow Ohio's example should the payday lenders' association sue to deligitimize Cordray's appointment. Payday lenders would have to show in court the numerical extent of their losses due to regulation of their storefront loan-sharking. Just imagine the bad press a lawsuit by the payday lenders' association would generate for the Rs. 'Republican obstruction of the CFPB generated $X million in payday lender profits.' 'Republican Senators S and B (I did not choose these initials randomly) received more than $Z in campaign cash from payday lenders.'

Any payday-lender victory in court on the appointment front would IMO be a Pyrrhic one. A payday lenders' suit over the CFPB appointment would be like the roaches themselves turning on the lights in a filthy kitchen! A no-nonsense cleanup would ensue, and the exterminator would be called!

WHAT'S YOUR OPINION? Will there be lawsuits over President Obama's recess appointment to the CFPB?

[ProgressiveEconomist]

1. .

Test

[bigtree]

2. good post

k&r

[Tx4obama]

3. K & R n/t

[joshcryer]

4. Payday lenders, rentacenters, exabortitant texting / calling / data fees.

All of those seriously hit my brother hard, he can't seem to get out of the cycle. CFPB is one of the best things that could happen to him.

Good post, and I agree with it, it's good no-nonsense politics.

[sendero]

5. Whether there is a legal challenge or not.

... this was the right thing to do.

[BzaDem]

6. It will definately be challenged in court.

All it takes is a single entity negatively affected by a rule to have standing. Many might not sue, but at least one certainly will. Money won't be a problem, as the Chamber of Commerce will likely join and happily fund the best litigating team in the country.

I'm thrilled Obama did this, in part because I don't think challengers would win in court. But they will certainly try.

[ProgressiveEconomist]

7. Did you read the OP? People with millions of dollars don't just throw them away

People with millions of dollars don't just throw them away on what you yourself describe as likely a lost cause. You believe that somebody;s going to finance months of multiple four-figures-per hour-lawyer boondoggles to recover loan-sharking profits lost to common-sense financial regulation? And that the USSC is going to abrogate permanently an important Presidential power to uphold a preposterous 'pro forma session' political tactic? And that Rs are going to allow somebody to generate months of the worst kind of anti-populist headlines during an election year?

Please explain your position.