Obama puts Elizabeth Warren in charge of consumer bureau launch
Harvard law professor Elizabeth Warren, appointed Friday to launch the new Consumer Financial Protection Bureau, likely won’t be the agency’s first official director, but she will have a major say in who gets the powerful job.
Warren also will have a broader portfolio of duties, advising President Obama on “policies and programs that are designed to protect the financial interests of middle-class families,” the White House said.
Obama on Friday described Warren as “a janitor’s daughter who’s become one of the country’s fiercest advocates for the middle class” and said she would have direct access to him from her senior White House position.
“Elizabeth understands what I strongly believe — that a strong, growing economy begins with a strong and thriving middle class,” Obama said as he announced the appointment with Warren at his side at a White House Rose Garden ceremony Friday. “And that means every American has to get a fair shake in their financial dealings.”
Avoiding a messy confirmation fight, Obama chose not to nominate Warren to a five-year term as the agency’s first director. Instead, he made her an assistant to the president and a special advisor to Treasury Secretary Timothy F. Geithner, jobs that do not require Senate approval.
In those roles, she will be responsible for organizing the powerful new consumer agency, which she first suggested in 2007. She’ll have 10 months to set up the agency as Geithner announced Friday it would begin operation next July 21.
Warren, 61, is a longtime expert on consumer bankruptcy and has become well known as head of the watchdog panel monitoring the $700-billion federal bank bailout fund. She stepped down from that position Friday.
“The new consumer bureau is based on a pretty simple idea: People ought to be able to read their credit card and mortgage contracts and know the deal,” Warren wrote on the White House’s blog Friday.
“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,” she wrote. “The time for hiding tricks and traps in the fine print is over.”
The agency is the centerpiece of the recently enacted financial reform law. An independent entity to be housed under the Federal Reserve, the agency will take over responsibility for writing rules — such as those governing disclosure forms — to protect consumers who are seeking mortgages, credit cards, pay-day loans and other financial products.
“Never again will folks be confused or misled by the pages of barely understandable fine print that you find in agreements for credit cards or mortgages or student loans,” Obama said.
The consumer agency also will have the power to enforce those rules at large banks and other financial firms, such as mortgage brokers. The agency’s power is concentrated in a single director.
But the law requires the Senate to confirm the agency’s director. With strong opposition to Warren from Republicans and the financial industry, Obama decided to put her in a position to organize the agency. He did so because that job is “an enormously important task … that can’t wait,” Obama said.
The Treasury Department is responsible for setting up the agency. Geithner will delegate that responsibility to Warren, his new special advisor.
House Financial Services Committee Chairman Barney Frank (D-Mass.), who pushed for Warren to be named the agency’s director, said she was not interested in the long-term appointment. Obama said Warren would “play a pivotal role” in helping him choose the agency’s director.
But White House Press Secretary Robert Gibbs would not rule Warren out as a potential nominee for the position. He said Obama would nominate a director in the next several months.
Obama’s appointment of Warren was cheered by her supporters in Congress and at consumer and liberal groups that had pushed strongly for her to be the agency’s first director.
“This is the boldest step Obama’s taken so far to rein in the big Wall Street banks. And it’s a major victory for grass-roots progressives who rallied for Warren,” the liberal group MoveOn.org said in an e-mail to members titled “Victory!”
But some Republicans in Congress and business groups criticized Obama’s move. They said that the agency, with an annual budget of about $500 million, had broad power, and the confirmation process for the director is one of the only congressional checks.
“This may be a calculated move to help fire up some groups ahead of the midterm elections, but it undermines the credibility and effectiveness of this already politicized new agency from Day One,” said David Hirschmann, president of the Center for Capital Markets Competitiveness at the U.S. Chamber of Commerce. The chamber opposed creating the agency.
Reps. Darrel Issa (R-Vista) and Spencer Bachus (R-Ala.) sent a letter to the White House on Friday requesting more information about what they called an “unusual arrangement” that is “undermining congressional oversight.”
They asked for details such as Warren’s specific responsibilities and supervisory authority and urged Obama not to use executive privilege to prevent Warren from testifying before Congress.