August 9, 2010 / 8:56 PM / 7 years ago

Democrats seek allies in U.S. consumer agency debate

WASHINGTON (Reuters) - Key Democratic lawmakers hope to exploit the rare August return of the House of Representatives to intensify pressure on the White House to nominate Elizabeth Warren as head of the new consumer financial protection agency.

Representative Carolyn Maloney and House Financial Services Chairman Barney Frank are urging President Barack Obama to act swiftly to nominate Warren -- who has alienated Wall Street and Republicans in her role as a watchdog of the government’s $700 billion bailout of the U.S. financial system.

Maloney, of New York, and Frank are trying to drum up more signatures for their draft letter requesting a meeting with Obama on the matter.

The White House said Obama has not made a decision yet on who will become the powerful first chief of the Consumer Financial Protection Bureau, but one official on Monday called Warren a “strong contender.”

The issue has become one of the top guessing games on Wall Street and in Washington.

The new agency will have broad powers to oversee a range of consumer financial businesses, including mortgage lending, payday loans and check cashing businesses.

Warren’s allies, who include consumer advocates, top professors and some well-placed lawmakers, say Warren has shown she will cry foul when bank greed trumps consumer rights.

“You have an opportunity to appoint to head this body a true visionary -- not the usual Washington practice of a careerist,” the lawmakers wrote in a draft letter that has been circulating in Congress. “You have an opportunity to appoint to this body the single best-qualified choice.”

Administration officials have made clear that Wall Street opposition would not prevent Obama from naming Warren if he decided she was the best person for the job.

“Though the president has not yet made a final decision on who will head the new consumer agency, he believes that Elizabeth Warren is a champion for middle-class families and consumers, and she is a strong contender for this position,” White House spokeswoman Amy Brundage said.

White House spokesman Bill Burton told reporters that an announcement on the consumer job would not come this week, but did not say when the decision would be made.

Sixteen House members have signed the letter from Maloney and Frank, and its authors hope to gain additional names this week when the House returns briefly from its August recess to vote on aid for state governments, an aide to Maloney said on Monday.

The letter will likely be sent to the president by the end of the week. A similar letter sent last month was signed by 63 House members.

Warren, a Harvard University law professor, is credited with conceiving the idea for the agency, which was created as part of the Dodd-Frank financial regulatory overhaul law.

Senate Banking Committee Chairman Christopher Dodd has raised questions about whether Warren can be confirmed by the Senate and has urged the White House not to nominate someone who does not have the votes.

The Treasury Department has already starting assembling the new agency.

The banking industry vigorously opposed its creation, as did congressional Republicans, arguing its powers are too sweeping and it could impose onerous regulations that would stifle business.

Opponents of the agency have raised objections to Warren as its head arguing she would be an activist and that she also lacks the needed management experience.

She has strong support from several key Democrats as well as from consumer groups and labor unions.

Additional reporting by Caren Bohan; editing by Leslie Adler

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