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White House sees no impact of court ruling on finance protection agency

In the wake of a decision Friday by the court of appeals in Washington that President Barack Obama’s appointment of three members to the National Labor Relations Board was invalid, White House spokesman Jay Carney said that Obama’s appointment of Richard Cordray as head of the Consumer Financial Protection Bureau (CFPB) was not affected by the court’s decision.

Obama’s appointments of both the NLRB members and of Corday were made on Jan. 4, 2012.

Related: Court rules against Obama appointments to labor board

Republican senators had blocked a vote on Corday’s nomination in an attempt to get Obama to agree to changes in the structure of the CFPB, an agency created by the 2010 Dodd-Frank law, which almost all Republican members of Congress had voted against.

In May 2011, Republican senators sent a letter to Obama saying that no nominee to head the CFPB would be confirmed unless he agreed to changes to the CFPB’s structure, including replacing the director with a board to oversee the agency, making it more akin to other federal regulatory agencies such as the Federal Communications Commission.

According to the White House, Obama’s appointments of the three NLRB members and of Cordray were “recess appointments” which he made when the Senate was not in session.

But a three-judge panel of the U.S. Court of Appeals for the District of  Columbia Circuit said Friday the NLRB appointments “were constitutionally invalid” because the Senate was not in recess, as specified by the Constitution.

If a president were free “to decide when the Senate is in recess,” it “would demolish the checks and balances inherent in the advice-and-consent requirement, giving the President free rein to appoint his desired nominees at any time he pleases,” the court said.

But Carney said the court’s ruling applied only to the litigant in the specific challenge before the court and had no wide implications.

“The decision that was put forward today had to do with one case, one company, one court” he told reporters. “It does not have any impact, as I think the NLRB has already put out, on their operations or functions or on the board itself. It has no bearing on Richard Cordray, and we, as I said, strongly disagree with it.”

It seems likely the Justice Department will appeal Friday’s decision to the Supreme Court.

"We disagree with the court's ruling and believe that the president's recess appointments are constitutionally sound," the Justice Department said in a one-line statement.

But Senate Republican Leader Mitch McConnell said in a statement that the appeals court decision “now casts serious doubt on whether the President’s ‘recess’ appointment of Richard Cordray to the Consumer Financial Protection Bureau, which the president announced at the same time, is constitutional.”

George Mason University law professor Todd Zywicki, a critic of the CFPB, said Friday on a conference call sponsored by the Federalist Society that the Cordray appointment is no different from the NLRB appointments: “The assumption has been that they rise or fall together. If the NLRB appointments were invalid, then Cordray’s was.”

He said any regulation issued by the CFPB “would presumably now be invalid,” including its rules on mortgages and non-bank lenders.