WASHINGTON (Reuters) - The White House is zeroing in on close associates of law professor Elizabeth Warren, an outspoken critic of Wall Street, to head the new U.S. consumer financial agency, a source with knowledge of the discussions told Reuters.
Warren has long been considered a front-runner to lead the Consumer Financial Protection Bureau, which will be charged with reining in abuses on issues such as credit card fees and mortgage-lending practices.
But among President Barack Obama's aides, there is disagreement over whether it would be wise for him to take on a highly visible fight to secure confirmation for Warren in the U.S. Senate.
Warren, who championed the consumer agency, has run into strong opposition from Republicans who say she would be too confrontational toward the financial industry.
But picking anyone other than Warren could be problematic for Obama because it would risk disappointing Democratic activists whose enthusiasm the president is counting on to help fuel his re-election bid in 2012.
Choosing someone with a close relationship with Warren might be one way to solve the problem for the White House.
The source, who spoke on condition of anonymity, said such a choice would be a clear signal that she would continue to help shape the consumer agency.
Presumably, an alternative candidate might not face the same kind of confirmation battle that Warren would.
Sources close to the discussions have said Warren is still under consideration. She has also been asked for her input about other candidates the White House might consider and has had a number of consultations with officials on the subject of the consumer agency job.
Publicly released records of Warren's schedule show conversations in recent weeks with White House counselor Pete Rouse, senior White House aide Valerie Jarrett, White House economic adviser Gene Sperling and senior White House economist Austan Goolsbee, among other officials.
The White House dilemma over Warren was underscored after two high-profile candidates for the consumer job, former Michigan Governor Jennifer Granholm and former Ohio Governor Ted Strickland, publicly took themselves out of the running, saying they felt the job should go to Warren.
Another name in the mix is Federal Reserve Governor Sarah Raskin.
The White House considered the creation of the consumer bureau one of the most important parts of the financial regulatory overhaul Obama signed into law last summer.
Newly empowered Republican lawmakers who won a majority in the House of Representatives and added seats in the Senate in November elections have made slowing down or preventing the reforms a legislative priority.
Warren, who has been serving as an adviser to Obama and the U.S. Treasury, has been helping to set up the consumer agency for its formal launch. She has made efforts to mend fences with the financial industry.
But in an appearance on the "Daily Show with Jon Stewart" on Tuesday night, Warren described the consumer agency as a "very concrete down payment" on the effort to help struggling middle class families.
She criticized efforts in Congress to weaken the consumer agency by removing its funding and taking away its powers.
"The fight isn't over," she said. "The fight moved from Main Street to the dark alley. And so now the game is let's just see if we can stick a knife in the ribs of this consumer agency."
Warren's advisory position in the Obama administration, which is temporary, did not require Senate confirmation.
That role would end once a director of the agency is in place.
Warren, a Harvard professor who headed a panel that investigated government bank bailouts during the financial crisis, has been mentioned as a possible candidate to challenge Massachusetts Republican Senator Scott Brown, who must seek re-election in 2012.