Warren to head launch of financial protection bureau
President Obama, sidestepping a possibly heated confirmation battle, will appoint Harvard law professor Elizabeth Warren as a special advisor to the Treasury Department to launch the government’s powerful new Consumer Financial Protection Bureau, according to two Democratic officials familiar with the decision.
FOR THE RECORD:
Elizabeth Warren: An article in the Sept. 16 LATExtra section about President Obama’s appointment of Elizabeth Warren to help launch the new Consumer Financial Protection Bureau included a reference to Rep. Bernie Sanders (I-Vt.). Sanders is not a representative. He is a U.S. senator from Vermont.
Warren could still be nominated as the director, but the Treasury appointment will allow her to shape the formation of the agency in the coming months, a top priority of Obama, without waiting for Senate approval, the officials said late Wednesday. They requested anonymity because they were not authorized to speak publicly.
Warren, 61, is an outspoken consumer advocate who has gained widespread attention as head of the watchdog panel overseeing the $700-billion bank bailout fund. An expert on bankruptcy, she proposed in 2007 the creation of a federal agency to protect consumers in the financial marketplace.
Obama adopted the idea last year when he unveiled a sweeping proposal to overhaul financial regulations, and it quickly became the controversial centerpiece of the legislation. He has said that she is a leading candidate to be named as its first director, an appointment for a five-year term that requires Senate confirmation.
Rep. Bernie Sanders (I-Vt.), one of Warren’s strongest Senate supporters, applauded Obama’s decision, which he said effectively makes her the agency’s temporary head.
“The American people are tired of being ripped off by large banks and financial institutions and, in professor Warren, they finally will have someone in a position of power who can protect their interests,” he said.
But Republicans would strongly oppose her nomination as permanent director.
Sen. Richard C. Shelby (R-Ala.) has said he opposed Warren’s nomination because she is not objective on consumer issues. And Sen. Bob Corker (R-Tenn.) wrote to Obama earlier Wednesday urging him not to circumvent the intent of the legislation to have the Senate confirm the agency’s head.
“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.
Corker and many other Republicans have said an activist such as Warren should not be named to such a powerful position with little congressional oversight.
Warren’s expertise and passion were derived from three decades of bankruptcy research. In the mid-1990s, she was chief advisor to the National Bankruptcy Review Commission. She co-wrote a best-selling book, “The Two-Income Trap: Why Middle-Class Mothers and Fathers Are Going Broke,” with her daughter, and has been a frequent guest on television talk shows, where she is credited with making complex issues understandable.
Congress narrowly approved the financial overhaul package this summer despite Republican opposition that focused on the consumer agency. The bureau will have broad powers to write and enforce rules protecting consumers in obtaining mortgages, credit cards and other financial products.
Republican leaders and leading industry groups, such as the U.S. Chamber of Commerce, said the agency would constrict credit and intrude on the rights of people to make their own financial decisions.
As the agency’s most vocal advocate, Warren has been touted by supporters of the legislation and consumer advocates as the best choice to be its initial director. Obama and top administration officials have praised her for coming up with the idea and helping push it into law.
“Now, the idea for this agency was Elizabeth Warren’s. She’s a dear friend of mine. She’s somebody I’ve known since I was in law school,” Obama, a Harvard graduate, said last week. “And I have been in conversations with her. She is a tremendous advocate for this idea.”
He said he would make an announcement soon on how the administration planned to move forward. “It’s only been a couple of months, and this is a big task standing up this entire agency,” he said.
Obama has been concerned that Warren would not be confirmed.
Republicans have used the threat of a filibuster to block numerous nominees, and Senate Banking Committee Chairman Christopher J. Dodd (D-Conn.) publicly worried this summer that Warren might not be able to get the 60 votes needed to clear the way for her confirmation.
Under the financial reform law, Treasury Secretary Timothy F. Geithner would head the agency until a director is confirmed. By appointing Warren as a special advisor to Geithner, a position that does not require Senate confirmation, she could be designated to get the agency running.
By Sunday, Geithner must announce the date that consumer protection powers from other regulatory agencies will be transferred to the Consumer Financial Protection Bureau. The law gives the Treasury secretary six months to two years from the bill’s enactment in July to get the agency operational.
Treasury officials have begun work on the new agency, which will be housed in the Federal Reserve and have an annual budget of about $500 million.