WASHINGTON-The biggest obstacle to confirming a director of the Consumer Financial Protection Bureau may not be Republicans or banking industry opposition but rather a ticking clock.
Even if President Obama were to nominate a director now, it would leave only 10 legislative weeks for the Senate to confirm the selection before the bureau officially assumes its rulemaking and enforcement authorities.
Such a tight window leaves the president with two options: Nominate a candidate who sparks little debate, a tough achievement given the anxiety surrounding the CFPB's powers and mandate, or make a controversial recess appointment, a move that will further infuriate GOP opponents.
If President Obama does not act by the July 21 deadline, the CFPB will begin its existence under a cloud, operating under ambiguous legal authority that may limit the scope of its actions.
"I think whether they have enough time will depend partly on how much of a lightning rod the nominee is," said Jo Ann Barefoot, co-chair of Treliant Risk Advisors and a former deputy comptroller at the Office of the Comptroller of the Currency. "If they choose someone who will trigger a strong negative reaction, it could get fought out and they could miss the deadline."
Even under normal circumstances, the confirmation process takes time. After the president sends his nomination to the Senate, the Banking Committee would need a few weeks to research the candidate in preparation for confirmation hearings, which could last a week.
The committee may take another week or two to vote on the nomination, after which the Senate must find time for floor debate. If Republicans seek to block or filibuster the nomination-Sen. Richard Shelby, the ranking member on the Banking Committee, is one of the chamber's most notorious nomination blockers-they could hold up the final vote for another week.
And that's an optimistic time line. A chamber not known for its expediency, the Senate often delays or pushes back its schedule. Although the calendar shows 12 weeks until the bureau's July 21 start date, the Senate is in recess for two of them to celebrate Memorial Day and Independence Day.
"Even having 60 votes isn't enough if you don't have time to debate a nomination," said Wayne Abernathy, an executive director at the American Bankers Association, and a former Treasury Department assistant secretary during the Bush administration. "If the Senate gets all involved in the budget, which it looks like they're going to...it may be tough to go to [Senate Majority Leader] Harry Reid and say, 'We'd like to have a week to debate the nomination.'"
That may force the president to pick someone more palatable to both sides, observers said.
L. Richard Fischer, a partner with the law firm Morrison & Foerster, said one such name has already been floated: Sarah Bloom Raskin. As a new governor of the Federal Reserve Board, Raskin has already navigated the nomination process, and the Senate has reviewed her credentials.
"She's a known quantity, she's got real banking experience as the superintendent of banks of Maryland, at the Federal Reserve Board," Fischer said. "She's articulate, she's intelligent and I think that could be done relatively quickly."
Such a candidate would have another distinct advantage: She is not Elizabeth Warren.
"That alone could speed the process," Fischer said.
But recent reports have indicated that Warren, the architect of the new bureau and its de facto head for the past seven months, is still a top contender for the post.
No one is ruling out a recess appointment, but it seems only one person-Warren-is worth the political capital that such a move would cost the president.
"I understand he's been told by many that it would be a very bad idea to do that, if that individual is Elizabeth Warren," Fischer said. "And I can't imagine he'd do a recess appointment for anyone else, so is it possible? Anything is possible, but I would put that as unlikely."
Republicans were already angry last year when Obama appointed Warren as an assistant to the president and special adviser to Treasury secretary Tim Geithner in charge of setting up the CFPB. They saw the move as an end run around the Senate nomination process and emphasized that the CFPB had only limited powers until an official director is in place.
Appointing Warren during a recess would further inflame Republican opposition, Barefoot said. "I know there are members of the Senate who are supportive of the president and of Elizabeth Warren as well, but who didn't like the bypassing of the statutory mandate and Senate prerogative regarding the advice and consent law," Barefoot said. "So if it was bypassed again I think there would be some people who would be concerned about it on a process basis, but I certainly wouldn't rule it out."
Some Republicans are already questioning whether a recess appointment would pass muster if the position is with a brand new agency.
Rep. Randy Neugebauer, R-Texas, pointed out that the wording of the law suggests that recess appointments are intended to fill vacancies that occur when Congress is in recess. "So does the recess appointment actually apply to a situation where...an initial office has never been filled?" he asked. "I think that's an interesting question, and I'm not sure."
Several industry observers did not think that was much of a problem, however. Robert Dove, a former Senate parliamentarian and public policy specialist at Patton Boggs LLP in Washington, said case precedence has determined the president may appoint a candidate during a recess whether or not the vacancy occurred during the recess. He said there are no special rules related to new agencies.
"I don't think there's any constitutional impediment to Elizabeth Warren being given a recess appointment," Dove said.
Most industry observers are flabbergasted at the way the Obama administration has handled the CFPB nomination. If Obama wanted to nominate Warren, the time to do so was last year, shortly after the Dodd-Frank Act creating the agency was passed, they said. Some wondered if the administration appointed her as de facto head of the CFPB in an effort to ease concerns over her nomination.
But if so, that appears to have backfired, Abernathy said.
"My assumption, if he was going to nominate Warren, he would have done so already," Abernathy said.
Fischer speculated that Obama may have wanted to nominate Warren all along, but his advisers have struggled to convince him that it would be a bad move.
"It's still hard for me to believe that he's just going to let it kind of dangle out there," Fischer said. "If his advisers coalesce around a candidate and that candidate appears to be someone who can be confirmed, I think you'll see it happen very quickly."
The issue is critical as policymakers continue to debate how much authority would be conveyed to the new agency without a director in place.
The most optimistic take is that the staff could enforce any existing statutes that are transferred from the other bank regulators, but would be barred from enforcing any new provisions relating to nonbanks.
