President Obama is set this week to name Elizabeth Warren as a special adviser to help set up the Bureau of Consumer Financial Protection, according to Capitol Hill sources. The move would sidestep a nomination fight over whether the Harvard University law professor should be director of the agency she first proposed three years ago.
Warren will be named as a special adviser reporting both to the White House and the Treasury Department, which has authority under the new financial regulatory law to construct the bureau before a director is named, according to a top congressional aide. By the end of this week, Treasury has to name a transition date for the bureau to be fully operational.
Another source said Warren had first been eyed as special adviser to Treasury in crafting the bureau, but her new position will give her even more sway as voice in the West Wing, where she has a key ally in senior adviser Valerie Jarrett.
The White House on Wednesday night would not confirm the selection, which was first reported by ABC News.
Warren had proposed the agency in a 2007 article for the journal Democracy, and Obama has been effusive in his praise of her, even using some of her analogies on why such an agency is needed. The independent bureau will have oversight on home mortgages, overdraft fees, credit card rules and other credit products and have a dedicated funding stream from the Federal Reserve -- estimated to be as much as $500 million annually.
House Financial Services Chairman Barney Frank and liberal advocacy groups had lobbied Obama to appoint Warren as director, arguing that she was the main force behind pushing for its creation against an onslaught of opposition led by banking groups and the U.S. Chamber of Commerce.
"While this is good news for American families, it is my hope that President Obama will nominate Warren to a permanent position to head up the CFPB," said Sen. Jeff Merkley, D-Ore. "She is more than deserving of the job, and the Senate should have the opportunity to confirm one of the nation's strongest consumer advocates."
But Warren sparked opposition from Republicans who were expected to tie up her nomination. Sen. Judd Gregg, R-N.H., has voiced fears the agency will be led by those with a social justice mission, rather than promoting stability in the banking system, although he has not named Warren specifically. Senate Banking Chairman Christopher Dodd had voiced concerns over whether Warren would be able to be confirmed -- to the consternation of liberal activists.
Sen. Bob Corker, R-Tenn., wrote to Obama on Wednesday expressing concern that he might nominate an interim director to avoid a bruising nomination fight.
"The individual who heads this bureau will be able to make rules, with ultimately no checks and balances, that could have broad-reaching implications for the U.S. economy as it relates to accessing credit, social justice and the safety and soundness of the U.S. banking system," Corker wrote. "The job is disproportionately reliant on the decisions of one individual with access to large sums of taxpayer monies to carry out the agency agenda. Taxpayers deserve better stewardship in the determination of who will take on this responsibility."
The decision will apparently leave the question on who will be the bureau's first director to the future. Travis Plunkett, legislative director for the Consumer Federation of America, said he wants to see how much power Warren will have to make decisions quickly.
"We need strong leadership that can make decisions fast and spell what priorities for this agency should be," Plunkett said.
Plunkett questioned what would be the initial priorities for the bureau, such as whether to target banks that are trying to evade the 2009 credit-card law.
Another key area will be establishing a procedure for customer complaints that would give much of the public a broad sense if it is responsive. Plunkett noted that the current complaint process through the Office of the Comptroller of the Currency is frustrating to many bank customers.
This article appears in the September 18, 2010 edition of NJ Daily.