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CFPB calls for dismissal of lawsuit challenging Cordray's appointment

11.28.2012

Some people question the legality of President Obama's appointment of Richard Cordray to head of the CFPB.

The Consumer Financial Protection Bureau was established in July 2011 to keep Americans safe in the mortgage industry and other sectors. However, the agency did not obtain full regulatory power until roughly a year ago when President Barack Obama appointed director Richard Cordray to his current position.

However, a number of companies and industry groups continue to question the legality of this appointment, since it was made while Congress was in recess. They claim that because the Senate was not also in recess at the time, the move was invalid.

A lawsuit, headed by former mortgage lender in Texas, claims that the recess appointment of Cordray caused the company to leave the mortgage lending business altogether and is now challenging the constitutionality of the decision.

Meanwhile, agencies in favor of Cordray's appointment, including the CFPB, Treasury Department and the Securities and Exchange Commission, filed a motion to dismiss the claims form the Texas-based lender, claiming it cannot make a sufficient connection between the move and the damages inflicted.

Leading up to the recent presidential election, a number of experts believed the CFPB was on the chopping block if Mitt Romney emerged victorious. Because President Obama will remain in office, the CFPB is expected to be around indefinitely with Cordray at the helm.

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