Obama taps Cordray to head CFPB in recess appointment

HousingWire.com, January 4, 2012

Obama taps Cordray to head CFPB in recess appointment

By Andrew Scoggin

President Barack Obama named Richard Cordray Wednesday as director of the Consumer Financial Protection Bureau.

The appointment came as the Senate is in recess, though senators met briefly for a pro forma session Tuesday. The upper branch of Congress is not scheduled to fully reconvene until Jan. 23.

Senate Republicans blocked the appointment of Cordray in early December, and said the pro forma sessions would prevent any recess appointments.

Cordray, former Ohio attorney general, joined Obama on stage at a speech outside Cleveland.

“There’s no question that Richard is the right person for the job,” Obama said. “When Congress refuses to act … then I have an obligation to do as president what I can without them.”

White House Communications Director Dan Pfeiffer announced the appointment Wednesday morning in a post on the White House blog. He called the pro forma sessions “a gimmick,” during which no actual business is conducted.

The Constitution gives the president the power to fill vacancies during Senate recess with terms that expire at the end of the following Senate session.

“But gimmicks do not override the president’s constitutional authority to make appointments to keep the government running,” Pfeiffer said.

The Senate will meet in another pro forma session Friday.

Senate Minority Leader Mitch McConnell, R-Ky., said Obama “has arrogantly circumvented the American people” in appointing “an unaccountable czar.” The Cordray move, McConnell said, breaks precedent that presidents make recess appointments only when the Senate recesses for at least 10 days.

“Congress has a constitutional duty to examine presidential nominees, a responsibility that serves as a check on executive power,” McConnell said in a statement.

Sen. Tim Johnson, D-S.D., and chair of the Senate Banking Committee, said in a statement Cordray is “eminently qualified for the job.”

“I look forward to working with Mr. Cordray and the CFPB as he moves forward on implementing long-overdue consumer financial protections for all Americans,” Johnson said.

Consumer advocates applauded the recess appointment, including the Consumer Federation of America, The Leadership Conference on Civil and Human Rights, the Center for Responsible Lending and the Woodstock Institute.

With a director, the CFPB can exercise its full authority via the Dodd-Frank Act, including regulation over nonbank financial institutions.

Senate Republicans want a five-member committee to lead the CFPB as well as a simple majority vote by an oversight council to veto bureau rules, rather than the current two-thirds vote.

Anthony Sanders, a professor of finance at George Mason University, said regulatory agencies like the CFPB typically act with good intentions, but can lead to limits in credit availability.

Obama also appointed three members to the National Labor Relations Board. He last made recess appointments in December 2010.

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House Democrats push FHFA on mortgage modifications

HousingWire.com, February 7, 2012

House Democrats push FHFA on mortgage modifications

By Andrew Scoggin

Three Massachusetts congressmen are asking the Federal Housing Finance Agency to reconsider options in loan modifications, saying the regulator hasn’t done enough to help homeowners.

Reps. Barney Frank, Michael Capuano and Stephen Lynch, all Democrats and members of the House Financial Services Committee, wrote in a letter to FHFA Acting Director Ed DeMarco that despite different options, “there is no question that action is better than inaction.”

Frank, ranking member of the committee, said in an interview with HousingWire Tuesday that he supports principal write-downs, along with additional modification and refinancing options. Capuano and Lynch in the letter do not outright back mortgage principal modifications, which would alter the actual amount due on the loan.

DeMarco heads “a public agency” with “public money,” Frank said, adding that DeMarco’s broadest duty is to help the economy.

“He is withholding his support for getting a significant piece of getting this recovery going,” Frank said. “It’s moving, but he can make it better. As the recovery picks up speed, the FHFA is a beneficiary because they own more houses than anybody.”

The three congressmen wrote to DeMarco that the statute that created the FHFA in 2008 does not require “you to withhold your cooperation from this effort to the extent that you have.” Frank was chairman of the financial services committee at that time, while Capuano and Lynch were members.

The FHFA is the conservator for Fannie Mae and Freddie Mac.

“There’s nothing in the mission of the FHFA that keeps him from doing this,” Frank said. “That’s his choice.”

The letter to DeMarco backs another signed last week from Massachusetts Attorney General Martha Coakley. In that letter to DeMarco, she wrote that the GSEs’ “unwillingness” to participate in principal write-down is “troubling.”

California AG Kamala Harris said in November she supports principal modifications, calling them a “common-sense reform.”

DeMarco resisted calls for principal write-downs in part on grounds they would cost taxpayers too much. A January analysis from the FHFA estimated reductions on GSE loans would cost Fannie and Freddie more than $100 billion, on top of the $151 billion they owe in federal bailouts as of the end of the third quarter.

That estimate doesn’t take into account any potential benefit to home prices or the economy, Frank said. Nor does it include any costs of defaulting homeowners. Though he said principal write-downs don’t always help borrowers avoid default. About 4.1 million borrowers are at least 30-days late on their mortgage, according to Lender Processing Services ($19.10 -0.52%).

The three Massachusetts House members said it’s important to protect taxpayers, but they’re “exposed to further problems when efforts that could enhance the pace of economic recovery” are not pursued by the FHFA.

DeMarco, the agency’s acting director since August 2009, has drawn fire from legislators for his positions on principal modifications at the GSEs. House Democrats from California asked President Barack Obama to recess appoint a permanent director to replace DeMarco, similar his installation of Richard Cordray as director of the Consumer Financial Protection Bureau.

Oregon Appeals Court backs former Vernonia pastor in First Amendment case

The Oregonian, February 8, 2010

Oregon Appeals Court backs former Vernonia pastor in First Amendment case, upholds $355,000 judgment in defamation suit

By Andrew Scoggin

A church can’t use the First Amendment as a defense against a defamation lawsuit if church officials accuse a former pastor of being a thief in front of the congregation, according to a game-changing ruling from the Oregon Court of Appeals.

The appeals court upheld a $355,000 jury award to Tim Tubra, who was fired as interim pastor of the Vernonia Foursquare Church in 2004 after church officials accused him of “misappropriation of church funds.” Tubra discovered later that church officials had made the accusation public in a letter read aloud to the congregation after he left his position. He was never charged with a crime.

A Multnomah County jury sided with the former pastor but the trial judge threw the verdict out, ruling that the circuit court didn’t have jurisdiction because of First Amendment issues.

However, the Oregon Court of Appeals ruled that the defaming statements were not religious in nature, so they didn’t qualify for protection under the First Amendment.

In the opinion, written by appellate Judge Rex Armstrong, accusing a pastor of theft is no more or less a religious matter “than is a defamatory statement accusing a pastor of child molestation.”

Armstrong described the specific circumstances of the case as a first in the United States.

The defense plans on appealing the decision to Oregon’s Supreme Court, said defense attorney John T. Kaempf. Because the case was argued in the appeals court Aug. 8, 2008, he said the length of time between that and this decision “confirms that this is a very important issue of First Amendment constitutional law.”

“The First Amendment protects a church’s right to speak to church members about a church pastor’s conduct without interference by secular courts,” Kaempf said in an e-mail. “Until the Oregon Court of Appeals’ decision (Jan. 27), this was the holding of every court in the country addressing similar facts.”

Professor Steven K. Green from Willamette University’s College of Law said historically there has been a “zone of protection” surrounding what happens in a church, but that this perception is changing dramatically.

“The decision puts Oregon on the vanguard in this area,” said Green, who is the director of the Center for Religion, Law & Democracy at the school. “Traditionally, employment disputes internal to a church have been off limits to courts because of the difficulty of determining what is theological.”

President and founder of conservative legal organization The Rutherford Institute, attorney John W. Whitehead, said the key to a court’s involvement in church matters is whether the issue at hand is ecclesiastical in nature. He said he had not seen a case quite like this.

“They’re not above the law, and they shouldn’t argue that they are,” said Whitehead, whose group deals in large part with religious issues.

Green said above all, the ruling, which he said would probably be affirmed if appealed to Oregon’s Supreme Court, could force churches to make some changes.

“The most noteworthy thing is it will change the way some churches do their business,” he said. “They will have to be more careful about criticizing each other in their own church. Many of things within religious bodies are done quite informally.”

The attorney for the Foursquare Church said no charges were filed against the former pastor because officials wanted to resolve the issue within the church community.

What happened in Vernonia came down to an agreement between Tubra and church elders before he took the interim job after being laid off as an associate pastor for the Columbia City Foursquare Church.

According to the court file, after Tubra was laid off because of economic reasons from his position as associate pastor at Columbia City Foursquare Church in September 2003, senior pastor John Michael Cooke offered him a position at a church in Vernonia.

Tubra was reluctant to take the job because of the low pay, according to the document, but Cooke and Ron Swor , another supervisor, offered him $1,100 a month for the first three months in addition to the normal $1,500 salary. He agreed to take the position November 2003 on an interim basis.

In April 2004, Tubra withdrew $3,000 from the Vernonia church’s account and explained to the church council that it had been earmarked for him as a gift. However, Cooke and Swor accused Tubra of a “misappropriation of church funds” and fired him.

In a letter written by Cooke and Swor and read aloud to the congregation, the two said that “there has been, to some extent, a financial misappropriation by former pastor (Tubra),” among other things.

Tubra did not know about the letter until a church member confronted him about it in the member’s home, and a Columbia City church member asked him about it in a grocery store.

When Tubra asked for the letter from church officials, one official said in an e-mail to another’s secretary that Tubra “has already demonstrated a willingness to lie and steal.”

After more than 20 years in the ministry, Tubra found himself unable to find steady work as a pastor. He had to sell his house and move into a fifth-wheel trailer with his wife, according to court documents. Tubra filed a defamation suit in September 2005 against The International Church of the Foursquare Gospel.

His attorney, Christopher G. Lundberg, said his client was heartened by the appeals court decision upholding the jury’s judgement.

“Mr. Tubra’s rights have been vindicated again,” said his attorney Christopher G. Lundberg. “This is big and very meaningful to him.”

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Susan Rice withdrawal gives GOP a rare victory

Politically Inclined, December 14, 2011

Susan Rice withdrawal gives GOP a rare victory

By Andrew Scoggin

Thursday’s big story out of Washington came not from fiscal cliff talks, but from U.N Ambassador Susan Rice bowing out of consideration for the soon-to-be-open post of Secretary of State.

Rice, reportedly once a heavy favorite to replace Hillary Clinton, faced the likelihood of a contentious Senate confirmation, having to appear before GOP lawmakers who heavily criticized her role in the response to the attack on the U.S. consulate in Libya. That September incident, which left four dead, became a major talking point for Republicans in the lead-up to and after the election.

Consider it a victory for congressional Republicans, who have had a rough go of it between the Supreme Court’s decision on Obamacare and the election. The legitimacy of their qualms aside, they wanted someone to take the blame for the Obama administration’s actions.

But there’s something bigger at play here, aside from tussling for political points. Rice stepping out could, in theory, give the GOP back a Senate seat they lost in November.

Sen. John Kerry (D-Mass.) is the hot new name for Secretary of State. He chairs the Senate Foreign Relations Committee, and his longtime Senate colleagues would likely give him an easy confirmation process (despite zingers like this).

And if Kerry becomes Secretary of State, that leaves his Senate seat vacant. Massachusetts law would call for a special election, last seen in 2010 after the death of Sen. Ted Kennedy. As we know, former Sen. Scott Brown (R-Mass.) has a great track record in special elections (though not so much in general ones).

Gaining any Senate seat is huge for Republicans, but especially in a Democratic stronghold like Massachusetts. Brown has the name and apparatus in place to mount a strong campaign, and Democrats just spent a lot of time and money to replace him with Senator-elect Elizabeth Warren.

Of course, this Senate seat speculation is moot if President Barack Obama opts for someone else as the country’s chief diplomat. And while prominent politicians assumed the post in early America (like Thomas Jefferson or James Madison), the trend before Hillary Clinton was to pick outside of politics (like Colin Powell or Madeleine Albright).

Besides the GOP hullabaloo, the Obama administration has more important things to worry about, like this fiscal cliff thing we’ve all heard about so much. Rice said as much in her letter to Obama released Thursday:

“… if nominated, I am now convinced that the confirmation process would be lengthy disruptive and costly — to you and to our most pressing national and international priorities. That trade-off is simply not worth it to our country. It is far more important that we devote precious legislative hours and energy to enacting your core goals, including comprehensive immigration reform, balanced deficit reduction, job creation and maintaining a robust national defense and effective U.S. global leadership.”

That last sentence is especially important for the administration. If it can divert attention away from Cabinet nominations, it instead can focus on Obama’s goals for his second term on matters that will contribute much more to his legacy and more directly effect the direction of the country.

For Republicans, they may have won this round, but the Obama administration still holds a significant political advantage. The president was just reelected a month ago, and more people approve of his actions in fiscal cliff talks than House Speaker John Boehner’s (R-Ohio).

So with Rice out of the limelight, it’s time for GOP lawmakers to lay off the Benghazi business and focus on the fiscal cliff, Sen. John McCain (R-Ariz.) chief among them. His passion might be foreign affairs, but as a senior leader and former presidential nominee, it’s time he concentrated his efforts on more pressing matters.

After all, even if Republicans gain a Senate seat, they’re likely to shoulder more of the blame if Washington fails to reach a consensus on the fiscal cliff.

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How ‘right-to-work’ became nontoxic in Michigan

Politically Inclined, December 11, 2012

How ‘right-to-work’ became nontoxic in Michigan

By Andrew Scoggin

Michigan, the once-proud bastion of the modern labor movement, became the 24th state to ban mandatory union membership Tuesday. And judging by the political and social undertones, it isn’t all that surprising.

Both the Republican-controlled House and Senate have passed versions for public and private sectors, and Republican Gov. Rick Snyder quickly signed them into law late Tuesday afternoon.

The manner in which the “right-to-work” legislative effort came up in a lame-duck session surprised many, and a whole lot of people are upset about the bills. The Detroit Free Press reported roughly 12,500 protesters around the state capitol at the height of the kerfuffle.

Still, from the outside looking in, it’s still shocking to see this happen in, of all places, Michigan.

Why is this happening right now?

For those who have seen “Lincoln,” they’d know a lame-duck legislature (as in, after an election but before a new session) is a great time to pass controversial measures. Even the fiscal cliff would be a good example nationally of how political actors behave when not as concerned with reelection.

The Michigan GOP has other motivation to push through right-to-work legislation now. The party lost five House seats in the November election, and now holds a narrow eight-seat advantage over Democrats. It might be more difficult to find votes once the new session convenes.

But despite Republican losses, right-to-work advocates gained an immense advantage. A referendum to add collective bargaining rights to the state constitution lost by 16 percentage points. An anti-union law might not be as toxic politically as once thought.

As an Oct. 16 story from the Associated Press said, what happens during the lame-duck session “has as much to do with the candidates’ performance as the proposals” in the election. That’s certainly true here, although the story did not raise the possibility of right-to-work legislation coming up.

After all, neither Snyder nor Republicans had said much about it.

So what’s going on here? Why is it happening at all?

All downfalls and collapses need scapegoats. For hockey fans, it’s NHL Commissioner Gary Bettman. For Republicans, it’s guys like Todd Akin or even Mitt Romney.

And for some Michiganders, it’s unions. They place the blame for the state’s economic struggles on these still-influential bodies, for keeping away businesses and driving them to nonunion states.

Whether that’s a fair assessment is another matter, but it’s hard to deny the momentum behind this train of thought. Every state in the South has right-to-work laws on the books, and many see this as the reason as to why foreign carmakers are building plants and factories there, and not in Michigan.

But more recently, what may have heightened this attitude in Michigan are actions in a neighboring state. (Not you, Ohio. Michigan has had enough of you.)

Indiana passed a similar law earlier this year, becoming the first Midwestern state to ban unions from requiring representation fees. But aside from showing this could happen in the Rust Belt, some in Michigan also saw this as a threat to business interests.

Michigan’s demographics could also explain why passing these laws may not be a political death wish. The state’s population fell between 2000 and 2010 censuses, but the western region’s total actually grew about 3 percent. That area of the state traditionally leans Republican, and the southeast region around Detroit – a Democratic stronghold – no longer makes up a majority of the state’s population.

Also, the proportion of Michigan employees represented by unions is just 18.3 percent as of 2011. It’s near the top among states, but it’s still below places like New York (26.1 percent) and even Alaska (23.7 percent). And while it’s a sizable voting bloc, it’s possible to ignore them altogether in certain areas and still win an election.

What does all this mean?

Questions remain as to this legislation’s impact. It’s unclear how it’ll impact the state’s economy, whether unions’ power will further wane and what effect it’ll have on workers.

Also, although the measures are referendum-proof, it’s still possible to repeal them. Democrats could take back the legislature – though they’d need to make heavy gains in the Senate – and the governorship in 2014. After all, President Barack Obama carried the state by nearly 10 percentage points.

But clearly Michigan, and the country, has changed since unions’ political high-point in the 1930s. Public support isn’t what it used to be, and maybe rightly so. After all, minimum wage laws are now the norm, and labor conditions are much safer than in other nations.

The fact that right-to-work legislation is even possible in Michigan – let alone that it makes some political sense – is as indicative of the labor movement’s strength as anything else.

(Full disclosure: My mom, a second-grade teacher, belongs to a union, and I worked under the auspice of one while at The Indianapolis Star. Also I’m from Michigan, so odds are that’s colored my understanding at least somewhat.)

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