Citigroup Lobbyist Casts Doubt on Obama’s Recess Appointment

January 11, 2012, 10:56 PM EST By Donal Griffin

Jan. 11 (Bloomberg) -- Citigroup Inc.’s lobbyist said President Barack Obama’s decision to make Richard Cordray head of the new financial watchdog agency wasn’t a “recess” appointment and may face a court challenge.

Naming Cordray to run the Consumer Financial Protection Bureau while the Senate held “pro forma” sessions left the White House open to legal action, especially from financial firms facing new rules, Candida Wolff, Citigroup’s executive vice president for global government affairs, said in an interview today.

“I don’t think this was a recess appointment,” said Wolff, who was chief lobbyist for President George W. Bush and now represents the third-biggest U.S. bank by assets. “I struggle with the fact that a session is still a session, and you can have business within that session.” Cordray’s authority to oversee non-banks and non-financial companies “will probably be one area where I can see action,” she said.

Obama had drawn fire for using his power to make appointments while Congress is out of session. Obama installed Cordray, a former Ohio attorney general, as consumer bureau director on Jan. 4, drawing objections from Republicans who opposed the agency’s creation. Senate members met every few days specifically to block recess appointees.

Court Challenges

“Legal challenges to the appointment are likely to come from every quarter -- from individuals to community and labor groups to possibly even Congress,” Wolff said in comments posted on the New York-based bank’s website. “Will the rules, regulations and proposals coming out of the bureau be stuck in limbo for the foreseeable future, and what impact will such uncertainty have on those who must decide how to comply with their rulings?”

Wolff said she’s not aware of any litigation planned by Citigroup or the American Bankers Association, the industry’s Washington lobby. Citigroup supports the goal of more transparency, choice and control for banking customers, according to Molly Millerwise Meiners, a Citigroup spokeswoman. She declined to comment on Cordray’s appointment as a matter of company policy.

“We’re not weighing in on the political arguments,” Wolff said in the interview. “We’re weighing into some of the questions that have to be resolved.”

Citigroup received a $45 billion U.S. bailout during the financial crisis, which has since been repaid.

White House Response

“The Senate has effectively been in recess for weeks, and is expected to remain in recess for weeks,” White House spokesman Eric Schultz said in a statement. Lawyers who advised President Bush also rejected pro-forma sessions, said Schultz, who called them a “sham” designed to keep Obama from doing his job. “Gimmicks do not override the president’s constitutional authority to make appointments to keep the government running,” he said.

Wolff is a lawyer whose career included a stint as deputy staff director for the Senate Republican Policy Committee, according to an April 2011 Citigroup statement when she joined the bank. She wondered on Citigroup’s website whether Cordray’s elevation -- as well as three recess appointments to the National Labor Relations Board -- would further damage relations between Republicans and Obama while setting a precedent for future contentious hires.

“If things weren’t tense before, the political stakes have been upped,” Wolff wrote. “Add to that a hostile election-year environment and even the most non-controversial piece of legislation may not make it in 2012.”

Maurice “Hank” Greenberg, who led bailed-out insurer American International Group Inc. for almost four decades until he was ousted in 2005, called Cordray’s appointment unconstitutional. Greenberg, 86, is chairman and chief executive officer of insurer C.V. Starr & Co.

“The president’s stuck his finger in the eye of Congress,” Greenberg told Betty Liu today on Bloomberg TV’s “In the Loop.” “You need the approval of the Senate for that appointment. It was bypassed. That doesn’t lead for a great relationship.”

--With assistance from Phil Mattingly, Hans Nichols and Kathleen Hunter in Washington and Noah Buhayar in New York. Editors: Rick Green, Steve Dickson

To contact the reporters on this story: Donal Griffin in New York at dgriffin10@bloomberg.net;

To contact the editor responsible for this story: David Scheer at dscheer@bloomberg.net.

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