Obama weighs interim appointment for consumer agency

WASHINGTON Tue Sep 14, 2010 3:32pm EDT

WASHINGTON (Reuters) - The Obama administration is weighing the appointment of Elizabeth Warren as the temporary director of a newly created U.S. consumer financial regulator, according to sources familiar with the discussions.

Naming Warren as the interim head of the Consumer Financial Protection Bureau is an option available to President Barack Obama if he wants to avoid what would be a tough fight for her confirmation.

Warren is an outspoken consumer advocate whose appointment many on Wall Street oppose.

The sources said, however, that the option of naming her temporarily was only one scenario under consideration and was not necessarily Obama's preferred option.

Warren, 61, is a Harvard law professor and bankruptcy expert who has served as chairwoman of the Congressional Oversight Panel, a watchdog for the U.S. financial bailout program.

The White House has described Warren as a leading candidate to head the agency, which will oversee an array of products from mortgages to credit cards and was a key component of Obama's financial reform enacted in July.

The reform legislation, which overhauled U.S. financial regulation, gives Treasury Secretary Timothy Geithner the authority to set up the consumer agency, including naming an acting director, if he chooses.

Last week Obama praised Warren as a "dear friend," whom he has known since law school, and said he had been "in conversations with her." He highlighted her role in conceiving the agency -- a hint that he was leaning strongly toward selecting her for the post.

Another option available to Obama would include giving her a "recess appointment" while the Senate is out of session. This would also allow her to serve on a temporary basis.

A third option would be to go through the Senate confirmation process, an alternative that would spark a battle with Republicans, who are likely to try to paint her as an ideologue whose zeal for regulation would hurt the competitiveness of the U.S. financial industry.

The White House may not want to run from such a fight. It would counter by depicting Republicans as favoring the interests of Wall Street over the middle class, an argument officials believe could play well politically for Democrats ahead of the November 2 elections.

An announcement about the post could come as early as this week.

"The president will have more to say about the agency and its mission soon," a White House spokeswoman said on Monday. "Elizabeth Warren has been a stalwart voice for American consumers and families and she was the architect of the idea that became the Consumer Financial Protection Bureau."

(Additional reporting by Jeff Mason, Dave Clarke and David Lawder; editing by Mohammad Zargham)