Wall Street critic Warren to join U.S. Senate Banking Committee

Senator-elect for Massachusetts Elizabeth Warren addresses supporters during her victory rally in Boston, Massachusetts, November 6, 2012.

WASHINGTON (Reuters) - Wall Street critic and Senator-elect Elizabeth Warren will join the Senate Banking Committee next year where she is likely to be a loud voice in favor of tight financial regulation.

The Democratic Steering Committee on Wednesday approved committee assignments for Warren and other Senate Democrats, installing Senator Patty Murray of Washington state as chairwoman of the Senate Budget Committee.

Warren, a Harvard Law School professor who won a hard-fought election in Massachusetts, will now have a powerful platform from which to oversee banking regulation.

The pick is a controversial one for the financial services sector, where many bankers have criticized her as an overzealous regulator bent on punishing Wall Street and who does not fully understand the financial system.

She has called for the breakup of largest banks and is expected to fight fiercely against Republican efforts to dilute reforms contained in the post-financial crisis Dodd-Frank Wall Street law.

Warren would also be able to forcefully push for financial regulators to use all the powers available to them to write strict interpretations of rules.

That could mean stronger curbs on Wall Street trading, higher capital buffers and rules that would compel mega-banks to shrink.

Warren is the architect of the new Consumer Financial Protection Bureau, an agency created by Dodd-Frank in 2010. Although she helped set up the new government watchdog, President Barack Obama refrained from nominating her as its first director, because of fierce opposition in the Senate.

"These committee assignments will allow all members of our caucus to bring their unique talents and expertise to bear as we work together to advance the interests of the middle class," Senate Majority Leader Harry Reid said in a statement.

Warren was a leading speaker at the Democratic National Convention in September and gave a rousing speech attacking Republican Mitt Romney as an out of touch elitist

She also won a seat on Wednesday on the Health, Education, Labor and Pensions committee.

Two other newly elected Democratic senators, Heidi Heitkamp of North Dakota and Joe Donnelly of Indiana, will join the Senate Agriculture Committee. Heitkamp also was assigned to the Banking Committee, while Donnelly also will join the Senate Armed Services Committee.

Murray replaces the retiring Kent Conrad as head of the Budget Committee, while Senator Ron Wyden of Oregon will become chairman of the Senate Energy and Natural Resources Committee, replacing the retiring Jeff Bingaman.

The assignments are still subject to approval by the Democratic caucus and the Democratic-majority full Senate, but these approvals are viewed as largely pro forma following the steering committee vote.

(Editing by Alistair Bell and Cynthia Osterman)