President Barack Obama named Harvard law professor Elizabeth Warren an adviser to help shape the new Consumer Financial Protection Bureau, calling her “one of the country’s fiercest advocates for the middle class.”
Warren will be an assistant to the president and a special adviser to Treasury Secretary Timothy F. Geithner with the assignment of setting up the agency, established by this year’s Wall Street financial regulatory overhaul.
“The Consumer Financial Protection Bureau will be a watchdog for the American consumer, charged with enforcing the toughest financial protections in history,” Obama, flanked by Warren and Geithner, said at a White House Rose Garden announcement.
By appointing Warren an adviser, Obama avoids a Senate confirmation battle while letting her help create the agency she is credited with proposing several years ago.
Obama said Warren, 61, will play a “pivotal role” in determining who will be the first director of the bureau when it becomes an independent agency housed at the Federal Reserve. That transfer may be still be months away.
It isn’t clear whether Warren will be a candidate to head the bureau, which would require Senate approval. White House spokesman Robert Gibbs, at a news briefing after the announcement, declined to say whether she will be in the running.
“For years banks and mortgage lenders and credit card companies have often used fine print and confusing language and attractive front-end offers to take advantage of American consumers,” Obama said. “All this has cost middle class families billions of dollars, tens of billions of dollars that they could have used to pay the bills or make the mortgage or send their kids to college.”
“The president and I are committed to the same vision” for the consumer bureau, Warren said in a statement prior to today’s announcement. “I am confident that I will have the tools I need to get the job done.”
She didn’t speak publicly at today’s announcement
Obama said that, as a “janitor’s daughter,” Warren has “seen financial struggles and foreclosures affect her own family.” He said she will work to recruit staff and oversee all aspects of the agency’s creation.
Architect of Agency
He called her the “architect” of the consumer agency, “so it only makes sense that she should be the architect working with Secretary of the Treasury Geithner in standing up the agency.”
Senator Christopher Dodd, the Connecticut Democrat who helped shepherd the regulatory bill, has questioned whether Warren would be able to get the necessary 60 votes for confirmation.
In an interview with Bloomberg TV yesterday, Dodd was asked if she would be operating as a de facto director. “Well, you can’t do that,” Dodd said. “You’ve got to have somebody confirmable here, and I’d be totally opposed to someone on a backdoor operation here.”
Dodd said Warren will be a “great asset for the administration” in her role as chairwoman of the steering committee.
Representative Barney Frank, a Massachusetts Democrat and a chief sponsor of the financial overhaul, said “nothing could be better news” for consumers than to have Warren help shape the new agency. “She will now have the opportunity to make it function as it was intended,” he said in a statement.
Republicans Representatives Darrell Issa of California and Spencer Bachus of Alabama, in a letter to White House Counsel Robert Bauer, questioned the “unusual arrangement” of Warren’s appointment.
“The president bypassed the Senate confirmation process,” they said. “Furthermore, by giving Professor Warren responsibilities at both the White House and the Treasury Department, he is undermining congressional oversight while giving her substantive authority.”
The consumer bureau is one of the biggest regulatory consequences of a Wall Street overhaul Obama signed into law in July. It will have a $400 million budget and the power to impose federal rules on mortgages, credit cards, layaway plans and other consumer credit products.
“People ought to be able to read their credit card and mortgage contracts and know the deal,” Warren wrote in a White House Web posting prior to today’s announcement. “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.”
The Treasury Department is responsible for establishing the bureau and under the law must transfer authority to the Fed no later than July 21, 2011. The administration expects to do so close to that deadline.
Consumer groups are urging the administration not to wait until the last minute to transfer the agency from Treasury to the Fed.
“We’d like it ready as early as possible. I don’t want them lollygagging,” said Ed Mierzwinski, program director at the U.S. Public Interest Research Group. At the same time, he said it will be a “big job” to build the agency. “We want to make sure that when it’s set up and they turn on the lights, that the power doesn’t short out.”
On Sept. 21, Geithner will meet with housing industry and consumer advocates to begin discussing how to resolve contradictions in federal law about rules for home loan disclosures, one of the bureau’s first legislated mandates, Treasury spokesman Steve Adamske said.
Obama used the Rose Garden statement to renew his push to extend Bush-era tax cuts for familes making less than $250,000 a year. “I am urging the leaders of the other party to stop holding middle-class tax cuts hostage and extend this relief to families immediately,” he said.
The political debate over extending the tax cuts, enacted in 2001 and 2003, is intensifying as Nov. 2 congressional elections approach.