Harvard professor picked to build consumer bureau
President Obama, choosing a route that allows him to placate liberal groups and avoid a confirmation battle in the Senate, on Friday named Elizabeth Warren as an adviser to set up the new Bureau of Consumer Financial Protection that was her idea three years ago.
Warren will serve as an assistant to the president and special adviser to the Treasury Department, providing the Harvard University law professor a strong hand in crafting how the agency will operate as it assembles staff and writes rules for credit cards, home mortgages and other financial products.
Significantly, the president said she will be recommending who should head the bureau -- the post her advocates wanted for Warren.
Warren did not speak during the brief announcement in the Rose Garden. But earlier, she gave a glimpse of her approach to her new job in a White House blog posting.
"If the CFPB can succeed at leveling the playing field," she wrote, "we can go a long way toward repairing a gaping hole in the budgets of millions of families. But nobody has ever thought or argued that the consumer bureau can fix everything. Lost jobs, stagnant incomes, rising costs for college, dwindling retirement savings -- there's a lot of work to be done."
The president called the agency's launch "an enormously important task." Praising Warren as the architect of the bureau, he called her "one of the country's fiercest advocates for the middle class." He promised that she will play a pivotal role in picking the bureau's director.
Liberal groups and some Democratic lawmakers lobbied Obama to appoint Warren to that post. But the president decided on the advisory role after concern, voiced most prominently by Senate Banking Committee Chairman Christopher Dodd, D-Conn., that her appointment would be blocked by Republicans.
The new title removes the chance of a nomination fight before the election and allows Warren to immediately start working with the Treasury team that is merging the consumer protection units of various regulators into the new bureau.
In his remarks, the president described the bureau as "a watchdog for the American consumer, charged with enforcing the toughest financial protections in history."
The U.S. Chamber of Commerce, which opposed creation of the bureau, protested the appointment as adviser without Senate consent, calling it "an affront to the pledge of transparency and consumer protection that's purported to be the focus of this new agency."
David Hirschmann, president and CEO of the U.S. Chamber's Center for Capital Markets Competitiveness, added, "Congress has already given up its right to approve this agency's budget and has given the director of this agency sole discretion over everything the agency does."
In a statement, Dodd congratulated Warren on her appointment but urged Obama to nominate a director for the post, which carries a five-year term.
"Until a director is at the helm, this new bureau will not have the teeth that it needs to put strong protections in place, and could leave the entire bureau in jeopardy," Dodd said. He has argued for the Senate's right to weigh in on a director and was against a plan to make Warren an interim director without going through a confirmation.
But her appointment was hailed by Speaker Rep. Nancy Pelosi, D-Calif., who called it "a true victory for America's middle class and one of the strongest statements we can make that Wall Street abuses will no longer be allowed to jeopardize our financial security."
Warren will start tackling issues right away, chairing a Tuesday forum with Treasury Secretary Timothy Geithner on simplifying mortgage disclosure forms, an issue that has thwarted regulators for years.
In accepting the post, Warren resigned as chairwoman of the Congressional Oversight Panel of the $700 billion Troubled Asset Relief Program.
Progressive groups were happy to see Warren play a role in setting up the agency but unhappy that she will not run it. Adam Green, co-founder of the Progressive Change Campaign Committee, criticized the White House for being cowed by Dodd.
Green said the White House is trying "to appease a senator who has been irrelevant for 35 years, becomes even less relevant when he retires in 3.5 months, and who sees screwing consumers as his golden opportunity to get a high-paying job on Wall Street."
Warren's appointment could provide fodder for Republicans, especially if they take control of Congress next year.
House Oversight and Government Reform Committee ranking member Rep. Darrell Issa, R-Calif., sent a letter on Friday to White House counsel Robert Bauer taking issue with what he called an "unusual arrangement." Issa also requested that Warren be available to testify in front of Congress and not use claims of executive privilege to block the disclosure of information surrounding the bureau's ramp-up.
Bill Swindell and Billy House contributed to this report