Obama to announce Wall Street critic Elizabeth Warren for powerful new consumer post Friday
By Julie Pace, APFriday, September 17, 2010
Obama to name consumer advocate to new post Friday
WASHINGTON — President Barack Obama is naming Elizabeth Warren a special adviser to oversee creation of a new consumer protection bureau, dodging a fight with Senate Republicans who view her as too critical of Wall Street to be confirmed as the agency’s chief.
Obama had spoken glowingly of Warren as a possible leader of the bureau, created in response to the 2008 financial meltdown. But the White House feared her lack of support in the financial industry would set the stage for contentious Senate hearings that could have derailed her nomination.
The bureau will have vast powers to enforce regulations covering mortgages, credit cards and other financial products.
Hours before Obama’s official announcement, Warren wrote in a post on the White House blog that the purpose of the bureau is to ensure that people are able to read their credit card and mortgage contracts and “know the deal.”
“They shouldn’t learn about an unfair rule or practice only when it bites them, way too late for them to do anything about it,” she wrote. “The new law creates a chance to put a tough cop on the beat and provide real accountability and oversight of the consumer credit market.”
The financial industry and the U.S. Chamber of Commerce mounted a fierce campaign to kill the consumer bureau while Congress assembled the legislation. Bank officials argued that regulators who guard the safety and soundness of banks should retain authority over consumer protections because they could best determine what regulations would help or hurt financial institutions. The chamber argued the bureau would ultimately increase costs to consumers by imposing rules on any business that extends credit.
The business and banking community especially opposed Warren as director, believing that as an architect of the idea she would establish an aggressive agency.
Warren, a 61-year-old Harvard University professor who describes herself as “not a Washington person,” will report to both the president and Treasury Secretary Timothy Geithner. Because she is not being named the bureau’s permanent director, Warren can assume her duties immediately.
Warren designed the advisory role during long conversations with White House officials, a person familiar with her thinking said. The person insisted on anonymity to discuss private conversations.
Warren has spent the past two years running the Congressional Oversight Panel, charged with monitoring the Treasury Department’s handling of the $700 billion bank rescue fund known as the Troubled Asset Relief Program.
The financial regulation law that Obama signed earlier this year gives the Treasury Department the authority to run the consumer protection bureau while the nomination of its director is pending. Control must be transferred to the new bureau within a year, but the secretary has the latitude to seek an additional six months to complete the creation of the agency. That means Warren could perform her new duties into 2012.
Senate Banking Committee Chairman Chris Dodd, who has questioned whether Warren would have enough support to win confirmation, said Thursday the White House was within its rights to name Warren as an adviser and expert.
But he added on Bloomberg television, “We need a director. We’ve got to have someone who is confirmable. The law requires that there be a director of this bureau of consumer financial protection and that that nominee be confirmed by the Senate.”
Asked whether Warren would effectively be serving in that capacity, Dodd replied: “You can’t do that. You’ll end up with too much opposition. … I’d be totally opposed to someone on a backdoor operation here.”
Obama plans to eventually name a permanent director, though an announcement isn’t thought to be imminent.
Associated Press writers Jim Kuhnhenn and Daniel Wagner contributed to this report.
Tags: Barack Obama, District Of Columbia, Government Regulations, Industry Regulation, North America, United States, Washington
