President Obama will appoint former Ohio attorney general Richard Cordray as the head of the Consumer Finanicial Protection Bureau today, invoking the president’s authority to make appointments when Congress is adjourned. To counter the president’s appointment, Congressional Republicans had refused officially to adjourn prior to the holiday break, and have met in pro forma sessions every three days to maintain a continuous session.
Obama’s action takes a page right out of President George W. Bush’s playbook. In a statement from Obama’s communications director cited by Bloomberg News, Dan Pfeiffer refers to the Bush administration’s opinion that the Senate “cannot use sham ‘pro forma’ sessions to prevent the president from exercising a constitutional power.”
Republicans are sure to challenge the appointment in court, which appears to be playing into the hands of the Democratic president, who has recently become more aggressive in his dealings with the opposition party.
From the point of view of the markets, more political confrontation will likely lead to more uncertainty and volatility. We could be in store for more of the political disagreement that lead to a near stand-still in government functions during the debate over the debt ceiling.