Leaving aside the constitutional questions, there is a potential statutory problem with the legality of the Cordray appointment under Dodd-Frank. Section 1066 of Dodd-Frank provides that the Secretary of the Treasury is authorized to perform the functions of the CFPB under the subtitle transferring authority to the CFPB from the other agencies “until the Director of the Bureau is confirmed by the Senate in accordance with Section 1011.” It turns out that section 1011 is a defined term which provides: “The Director shall be appointed by the President, by and with the advice and consent of the Senate.”
This seems to suggest that even if the President might be able to appoint Cordray under the recess power the full grant of statutory authority wouldn’t transfer to the Bureau unless the statutory language was fulfilled as well.
(HT: Jerry Loeser)