Tempers flare with consumer ally Warren in hot seat

Tue May 24, 2011 6:18pm EDT

* Republicans, Wall St oppose consumer bureau

* Warren is candidate to be the bureau's first director

By Dave Clarke

WASHINGTON, May 24 (Reuters) - Testimony by White House consumer adviser Elizabeth Warren before a House subcommittee broke down into acrimony when the panel's Republican chairman accused her of lying about the terms of her appearance.

Warren testified on Tuesday before a House of Representatives Oversight and Government Reform panel about her efforts to set up the new Consumer Financial Protection Bureau, an agency Republicans and Wall Street do not like and want to gut.

The hearing focused on disputes over the scope of the agency's power, but her appearance ended in heated wrangling over how long she would testify.

About an hour into the hearing Republicans sought to temporarily adjourn for votes. Warren objected to sticking around for more questions upon their return, saying her afternoon was packed with meetings and that the committee had agreed she would only stay an hour.

"Congressman, we had an agreement," she told Republican subcommittee Chairman Patrick McHenry after some back-and-forth.

"You had no agreement, you are making this up, Ms. Warren," McHenry responded.

The committee's lead Democrat, Elijah Cummings, jumped in, telling McHenry, "I'm trying to be cordial here, you just accused the lady of lying."

Tuesday's mini-drama of Democrats vs. Republicans vs. Warren has played out for months and would escalate if the Obama administration formally nominates her to become the director of the consumer agency.

Warren, a Harvard law professor who previously served as a watchdog for the government's $700 billion financial system bailout, has run into strong opposition from Republicans, who say she would be too confrontational with the financial industry.

Warren has been acting as an adviser to President Barack Obama and the Treasury Department while setting up the agency, which was created by last year's Dodd-Frank legislation and is set to open its doors on July 21.

The hearing focused on Republicans' contention that the new bureau, which will regulate products like credit cards and mortgages, was given too much power.

Warren disagreed, saying that there are several checks on the agency, including veto power from the new Financial Stability Oversight Council.

After the dust-up, cooler heads prevailed and McHenry allowed Warren to leave and submit written answers.

But McHenry got in a parting shot, releasing a statement at the end of the day: "I was shocked by Ms. Warren's blatant sense of entitlement." (Editing by Steve Orlofsky)

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