Gary Kurtz, a lawyer representing the Gordon Law Firm of Los Angeles, said he sent a Jan. 29 letter to the bureau asking for a negotiated settlement of the six-month-old case in light of a federal court ruling that invalidated so-called recess appointments similar to Cordray’s.
“I want to give them an opportunity to resolve this without court intervention,” Kurtz said in a telephone interview. “Resolving this informally would preferable.”
Absent a settlement with Gordon, the bureau risks a court challenge that could become a test case for its authority in the wake of recess-appointment ruling. In its July 17 complaint against the firm, the CFPB said Gordon took up-front fees to help homeowners facing foreclosure, then did “little or nothing” for them.
CFPB spokeswoman Moira Vahey said the agency “is moving forward with the case as planned.”
The CFPB, created by the 2010 Dodd-Frank law that overhauled U.S. oversight of financial services, is intended to protect consumers from abusive practices. Covering banks like JPMorgan Chase & Co. and non-bank firms such as payday lenders and debt collectors, the agency has also created a system for resolving consumer complaints.
Dodd-Frank Timeline
Dodd-Frank created a timeline for the bureau to assume its powers, giving it authority over banks with assets of more than $10 billion on July 21, 2011. The law permitted its other powers, such as supervision of non-banks, upon the confirmation of its director by the Senate.
Gordon’s demand for a settlement stems from a Jan. 25 decision by the U.S. Court of Appeals in Washington that President Barack Obama’s use of a procedure known as a recess appointment to install three officials at the National Labor Relations Board on Jan. 4, 2012 was unconstitutional.
Since Cordray was made head of CFPB on that same day by the same process, a company affected by the CFPB could use the legal principle in that case to try to upend Cordray’s appointment and roll back his actions. On Jan. 24, Obama renominated Cordray for the full five-year term as head of CFPB.
Careful Consultation