President Obama is expected to appoint Elizabeth Warren as an assistant to the president and special advisor to Treasury Secretary Tim Geithner tasked with getting the new consumer protection bureau on its feet, a Democratic official said late Wednesday.
The official, who spoke on condition of anonymity, said Warren will report directly to Obama and Geithner as she leads the administration's work in setting up the Consumer Financial Protection Bureau.
Insurance Networking News’ sister publication, American Banker, first reported on Monday the Obama administration was leaning toward such a move, which has already drawn criticism from Senate Banking Committee Chairman Chris Dodd and several GOP senators.
President Obama is expected to make a formal announcement as early as today.
The appointment effectively side-steps a potentially bruising Senate confirmation battle for Warren, who is strongly opposed by the banking industry and several GOP lawmakers.
Some observers have said Obama may formally nominate Warren for the post next year after she has completed the task of setting up the new agency.
After reports of the possible appointment broke earlier this week, Dodd said such a move would be a "mistake," warning it could provoke a backlash among lawmakers. But fellow Democrats disagreed with the Connecticut lawmaker, with several suggesting the White House should appoint Warren as expeditiously as possible. Republicans, meanwhile, objected to any direct appointment, saying it would damage Warren's credibility.
Warren, a Harvard professor who first came up with the idea of a consumer protection agency, has been the subject of an intense lobbying campaign by consumer and liberal groups. Several lawmakers, including House Financial Services Committee Chairman Barney Frank, have endorsed the push, writing letters to Obama urging him to nominate her.
Warren first mentioned the idea in 2007 in an article entitled "Unsafe at Any Rate," in which she argued it was unfair for consumers to receive multiple protections from faulty toasters but not from lending products. She proposed a Financial Product Safety Commission.
"No one expects every customer to become an engineer to buy a toaster that doesn't burst into flames, or analyze complex diagrams to buy an infant car seat that doesn't collapse on impact," Warren wrote. "By the same reasoning, no customer should be forced to read the fine print in 30-plus-page credit card contracts to determine whether the company claims it can seize property paid for with the credit card or raise the interest rate by more than 20 points if the customer gets into a dispute with the water company."
This story has been reprinted with permission from American Banker.
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