Warren Named to Set Up Consumer Protection Bureau

Elizabeth Warren To Be Appointed to Help Create Consumer Finance Protection Bureau
Warren, Who First Called for Such an Agency in 2007, Known for Blunt Talk

By MATTHEW JAFFE
Sept. 15, 2010

E_Warren_MMBM_Roosevelt.jpgPresident Obama will select Elizabeth Warren to join the administration in a special advisory role to help form the new Consumer Financial Protection Bureau, a watchdog agency she first proposed back in 2007.

The move, first reported by ABC News' Jake Tapper, gives Warren an important role in creation of the bureau, but avoids, for now, a confirmation fight in the Senate. Her selection will appease a slew of prominent lawmakers, progressives, and labor unions who in recent months have clamored for her nomination to the post.

After all, the new agency -- part of the sweeping Wall Street reform bill that passed Congress earlier this summer -- was Warren's brainchild. In 2007 Warren, the Harvard Law professor and bailout watchdog, proposed the creation of "a new regulatory body to protect consumers who use credit cards, home mortgages, car loans, and a host of other products.

"Clearly it is time for a new model of financial regulation, one focused primarily on consumer safety rather than corporate profitability," Warren wrote in the summer of 2007.

Though Warren led the charge for greater consumer protections, she was far from a shoo-in to oversee the new agency. Some prominent members of the administration and Congress questioned whether Warren -- a straight-shooting, no-holds-barred critic of both the financial industry and the federal government -- might be too controversial to win Senate confirmation if she is eventually chosen by the President to lead it.

Earlier this summer sources told ABC News that Treasury Secretary Tim Geithner had "concerns" about Warren, while powerful Senate Banking Committee chairman Chris Dodd raised doubts about support for Warren on Capitol Hill.

"Elizabeth, I think, can be a terrific nominee. The question is, 'Is she confirmable?'" Dodd said in an interview on National Public Radio in July. "And I think there's a serious question about it."

In recent weeks, though, Warren met with President Obama on several occasions and it started to appear increasingly likely that she would indeed be given the chance to form the consumer protection bureau.

The president said at a recent White House press conference that Warren was "a tremendous advocate" for standing up for consumer's rights against the perils of a financial industry that ran amok in the build-up to the 2008 meltdown. While Obama avoided directly answering if he was worried about Warren's support on the Hill, he said he was "concerned about all Senate confirmations these days," citing that the Republican minority insists on Democrats getting 60 votes on nearly every issue, even seemingly non-divisive ones.

Progressives such as syndicated newspaper columnist David Sirota have argued that Warren should not be considered controversial on the Hill simply because she's a tell-it-like-it-is Washington and Wall Street outsider, whereas other administration officials such as Commodity Futures Trading Commission chief Gary Gensler and Office of Management & Budget director nominee Jacob Lew --former executives at Goldman Sachs and Citigroup respectively -- were viewed as safe choices.

"The closer you are to the for-profit institutions that brought our economy to the brink, the easier it is for you to get a job in Washington. The more independent you are from those institutions, the more controversial a figure you are," Sirota told ABC News in July.

It is precisely Warren's blunt talk that has helped her become a hero for consumers furious at Wall Street's predatory practices and Washington's lack of protection in the past few decades.

As the head of the Congressional Oversight Panel, a government watchdog created to oversee the controversial $700 billion Wall Street bailout, the Oklahoma native has routinely criticized policies and decisions at Obama's Treasury Department under the leadership of Tim Geithner.

For instance, she has ripped the agency's embattled foreclosure prevention program as "behind the curve."

"We need a program with far more urgency and some real teeth in it," she told senators at a hearing this summer.

That type of blunt talk is par for the course for Warren, but not for Washington, where reports are usually written with more subtle language, composed in a type of hidden code. Warren is fond of recalling an incident in early 2009 when an official on the Hill told her that one of the panel's initial reports was "too direct," suggesting that she take a more diplomatic approach.

"Well then what's the point?" replied Warren.

That sort of plain-spoken attitude has made some waves on the Hill, where senators would have faced adecision on whether to confirm her to implement what Obama has called "the strongest consumer financial protections in history."

The financial industry, for one, would clearly prefer to see someone leading the agency who is more likely to see their side of the issue -- not just the consumers' side. With their army of lobbyists, the industry could have made Warren's confirmation quest even more difficult.

But by appointing Warren to the new special advisory role, the White House  and Warren  will now avoid a contentious confirmation fight in the months leading up to the November mid-term elections. And Elizabeth Warren will get the agency she first proposed up and running.

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