Caren Bohan and Ross Colvin
WASHINGTON (Reuters) - President Barack Obama plans to name Wall Street critic Elizabeth Warren to a special advisory role helping to set up the new U.S. consumer financial watchdog, Democratic sources said on Wednesday.
Warren, a 61-year-old Harvard law professor, would report to Obama and the Treasury Department in a position that would bypass the Senate confirmation process.
An announcement was likely to come on Friday.
Warren is reviled by many on Wall Street for her calls to crack down on abusive lending practices by financial firms, but she is a hero to liberal activists and consumer groups.
The landmark U.S. financial reform law, enacted in July, mandated the creation of the consumer bureau, which will have broad powers to write and enforce regulations covering mortgages, credit cards and other financial products.
Warren, whom Obama has referred to as a “dear friend,” came up with the idea for the consumer agency.
Several senators, including Democratic Senate Banking Committee Chairman Christopher Dodd and moderate Republican Olympia Snowe, have expressed opposition to putting Warren in charge of the consumer agency without seeking Senate confirmation.
Republican Senator Bob Corker wrote a letter to Obama urging him not to bypass the confirmation process. He said it was “an important tool to ensure that a qualified, nonpartisan individual will head this agency and be accountable to Congress, taxpayers and the safety and soundness of the banking system.”
Democratic Senator Jeff Merkley welcomed Obama’s decision but said he still hoped Obama would nominate Warren to a permanent position as head of the consumer bureau.
“There isn’t a candidate more fit to get the new consumer financial protection agency up and running than Elizabeth Warren,” Merkley said.
“She has been a tireless advocate for financial fairness for working families and was the driving force behind the creation of the new Consumer Financial Protection Bureau.”
Warren has served since late 2008 as chairwoman of the Congressional Oversight Panel, a watchdog agency for the $700 billion bailout of the financial industry. But she has recused herself from voting to approve the panel’s latest monthly report, which is due to be released at 12:01 a.m. (0401 GMT) on Thursday.
The panel has been critical of the U.S. Treasury’s handling of TARP, and has argued that while the bailout program may have averted a financial collapse, it has reinforced perceptions that the largest banks are too big to fail and has done little to alleviate problems in the housing market.
“Because of the status of job discussions with the president, (Warren) felt it was appropriate to recuse herself,” a source familiar with the matter said.
The financial reform law gives the Treasury Department the authority to set up the new agency and get it up and running.
If Obama were to formally nominate Warren as director of the bureau, he would face the risk that Republicans would seek to block her.
Wall Street and many Republicans contend Warren would take a heavy-handed regulatory approach that would hurt the profits and global competitiveness of banks and other financial firms.
Obama sees the agency’s creation as a signature accomplishment, and the administration is concerned that a delay of several months in getting confirmation for Warren could be a setback to the effort.
Treasury soon will have to lay out a timeframe for how long it will take to create the bureau. By September 21, Treasury is required to select a date when the functions of existing agencies will be transferred to the consumer bureau.
Additional reporting by Dave Clarke, David Lawder and Kevin Drawbaugh; Editing by Paul Simao
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