President Obama on Friday appointed Harvard law professor Elizabeth Warren to oversee a powerful new consumer financial protection bureau. The move will enable the controversial Warren to immediately take charge and sidestep a messy Senate confirmation battle in which many Republicans and financial institutions would likely oppose her.
Obama described Warren as “one of the country’s fiercest advocates for the middle class,” and said that “never again” will consumers be allowed to fall prey to deceptive practices by financial institutions and credit card companies.
Warren, until now the chairwoman of the Congressional Oversight Panel that investigated the government’s handling of the financial crisis and Wall Street bailout, was the first to suggest the creation of a bureau to protect borrowers from abuses in credit cards, mortgages and other such loans. Under the financial regulation overhaul law enacted this year, the new watchdog agency will have authority to write and enforce its own rules and operate with a dedicated source of funding.
Instead of selecting her to become the first director of the bureau – a post that requires Senate confirmation – Obama announced today in the White House Rose Garden that Warren would serve as an assistant to the president and special adviser to Treasury Secretary Timothy Geithner, and would have a broad mandate to create, staff and operate the new agency.
“Basically, the Consumer Financial Protection Bureau will be a watchdog for the American consumer, charged with enforcing the toughest financial protections in history,” Obama said while flanked by Warren and Geithner. “Now, getting this agency off the ground will be an enormously important task – a task that can’t wait – and that task is something I have asked Elizabeth to take on. Secretary Geithner and I both agree that Elizabeth is the best person to stand this agency up.”
her advice will make sure American consumers are protected
from hidden fees, abusive terms and deceptive practices.”
Obama declined to take questions from reporters about his decision to put Warren in place without allowing the Senate to have its say – a tactic that was criticized on Capitol Hill by some Republicans but roundly hailed by Democrats, including House Financial Services Committee Chairman Barney Frank, D-Mass., and Senate Banking Committee Chairman Christopher Dodd, D-Conn., the chief authors of the financial overhaul legislation.
Frank said that “nothing could be better news” for consumers “in terms of being protected in financial matters like home mortgages, bank accounts and credit cards.” Dodd said that Warren “has proven to be a strong, qualified and terrific watchdog and I have no doubt her advice will help move this important new bureau forward to make sure American consumers are protected from hidden fees, abusive terms and deceptive practices.”
But Dodd has expressed uneasiness about back-door efforts by Obama to circumvent Senate review in putting Warren in charge of the new bureau, and today he urged Obama to move swiftly to nominate a director of the Consumer Financial Protection Bureau, to be considered by the Senate, as the law requires. “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.
White House press secretary Robert Gibbs sidestepped questions about whether Warren herself would be in the running for the director’s post, saying only, “The president will nominate a director and Elizabeth will be instrumental in filling that position.”
unilateral appointment to … restrict Americans’ financial options.
Meanwhile, House Republican Study Committee Chairman Tom Price, R-Ga., complained that “President Obama just gave his personal friend an open-ended, unilateral appointment to head up a brand new bureaucracy with sweeping powers to restrict Americans’ financial options. And he did it because she is way too far left of mainstream America to be confirmed by a Democrat-controlled Senate.”
Earlier today, Warren said in White House blog post: “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. They shouldn’t learn about an unfair rule or practice only when it bites them — way too late for them to do anything about it. 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 time for hiding tricks and traps in the fine print is over. This new bureau is based on the simple idea that if the playing field is level and families can see what’s going on, they will have better tools to make better choices.”
Obama’s brief announcement caps weeks of speculation on whether the president would stand by his longtime friend and elevate her to this new post, or try to duck controversy by selecting a less controversial candidate such as Michael S. Barr, an assistant Treasury secretary, or Eugene Kimmelman, a deputy assistant attorney general in the Justice Department’s antitrust division.
A Polarizing Hero
For sure, Warren, 61, is a polarizing figure, and an unalloyed heroine of liberal and consumer groups. Warren has portrayed banks and brokers as little more than crooks and con artists, and berated federal regulators who she said virtually stood by and allowed consumers to be fleeced. As head of the congressional oversight panel, which she resigned from today, Warren publicly lectured Geithner and other senior officials for their handling of the financial crisis, and she once declared that she and Geithner don’t “see the world the same way.”
Some critics say she lacks the experience to manage a large agency or bureaucracy, and that her crusading on behalf of consumers could inadvertently make loans harder to get and more expensive for ordinary Americans and small businesses. But Warren was the unqualified first choice of liberal and consumer groups, who say no one else would be better to champion the cause of American consumers and crack down on consumer fraud and “trips and traps” in credit card policies and other consumer loans. Many of the groups promoting Warren’s candidacy viewed the choice of the head of the new bureau as a test of the Obama administration’s commitment to consumer advocacy and progressive values.
Americans for Financial Reform, a coalition of more than 250 national and state organizations working together for strong financial reform, praised Obama’s announcement today. Lisa Donner, executive director of the umbrella group, said Warren is “exactly the right person to set the new Bureau of Consumer Financial Protection on the right course: putting the public interest first and standing up to unfair tricks and traps from big banks and financial industry special interests.”
Obama made it clear in his announcement that he expects Warren to behave as the chief champion and lobbyist for consumers, just as well-paid lobbyists for years have protected the interests of the powerful financial industry.
“Elizabeth understands what I strongly believe – that a strong growing economy begins with a strong and thriving middle class and that means every American has to get a fair shake in their financial dealings,” Obama said. “For years, financial companies have been able to spend millions of dollars on their own watchdogs, lobbyists who look out for their interests and fight for their priorities. That’s their right, but from now on consumers will also have a powerful watchdog, a tough independent watchdog whose job it is to stand up for their financial interests, for their family’s financial future.”
Adam Graham-Silverman, Michelle Hirsch and Jennifer DePaul of the Fiscal Times contributed to this report