A federal court ruling that invalidated President Obama’s three recess appointment to the National Labor Relations Board may have implications for the Consumer Financial Protection Bureau. That’s because the President’s appointment of Richard Cordray as CFPB Director also happened during the same recess period.

Although financial institutions subject to CFPB regulation might balk at compliance in light of the ruling from the U.S. Court of Appeals for the D.C. Circuit, such a stance could be risky in the long term, according to Alan S. Kaplinsky, Practice Leader of Ballard Spahr’s Consumer Financial Services Group.

Mr. Kaplinsky noted that while the logic of the D.C. Circuit’s ruling applies to Mr. Cordray’s appointment, no court has yet held that the appointment is invalid. “Unless or until that happens, I think anyone thumbing their nose at the bureau is doing so at great peril. Things will get sorted out. It’s not like the bureau is going away anytime soon,” he said.

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Consumer Financial Services