WASHINGTON (Reuters) - President Barack Obama named Wall Street critic Elizabeth Warren on Friday to oversee creation of a new consumer financial protection agency, drawing praise from liberals and an outcry from Republicans and the financial industry.
Obama announced Warren as a special adviser to steer the new agency’s establishment, allowing him to avoid a bitter Senate confirmation fight if he had nominated her to be director. Republicans accused him of circumventing congressional oversight.
Calling Warren “one of the country’s fiercest advocates for the middle class,” Obama made clear the outspoken Harvard University professor would take the lead in shaping the powerful new watchdog, a centerpiece of the sweeping regulatory overhaul he signed into law in July.
“From now on, consumers will ... have a tough, independent watchdog whose job it is to stand up for their financial interests, for their families’ future,” Obama said in the White House Rose Garden with Warren at his side, as he highlighted her working-class roots as a janitor’s daughter.
The White House hopes Warren’s appointment will appeal to voters resentful of Wall Street excesses and help energize the president’s liberal base before November 2 elections, when his Democratic Party faces the threat of big losses in both chambers of Congress.
Obama used Friday’s announcement to highlight his financial reform legislation, which Republicans and Wall Street have largely opposed and voters have mostly ignored as they fret over an economy saddled with near double-digit unemployment.
The financial industry and many Republicans opposed Warren’s selection, worried that she will bring a heavy-handed regulatory approach that could crimp business profits and global competitiveness.
The Consumer Financial Protection Bureau, which is Warren’s brainchild, will have broad powers to write and enforce rules covering mortgages, credit cards and other consumer financial products.
She has until July 2011 to get the agency up and running.
Warren, 61, becomes an assistant to the president and special adviser to Treasury Secretary Timothy Geithner. Obama said she would have direct access to him.
“She will also play a pivotal role in helping me determine who the best choice is for director of the bureau,” Obama said.
The White House said Obama hopes to name the agency’s chief in the next several months but declined to say whether Warren would be a candidate.
Warren, whose grandmother drove a wagon in the Oklahoma land rush, said in a White House blog post that the new agency would act as a “tough cop on the beat” and declared that the time for financial “tricks and traps” was over. She did not make remarks at the Rose Garden ceremony.
Warren told U.S. television networks the post of agency director had been on the table but she had been anxious to get to work right away, which her new role allowed her to do.
The Senate confirmation process could have dragged on for up to 10 months, White House spokesman Robert Gibbs said.
“I’m coming to Washington to try to help get this agency started,” she told Fox television. “And if I can be helpful, I don’t care if you call me the dogcatcher.”
Supporters hailed her appointment.
“I would like to congratulate American consumers, because nothing could be better news for them in terms of being protected in financial matters like home mortgages, bank accounts, and credit cards,” said Representative Barney Frank, Democratic chairman of the House Financial Services Committee.
Warren’s critics saw her appointment differently.
“The Obama administration’s first priority should be ensuring that our financial institutions are operated in a safe and sound manner,” Republican Representative Spencer Bachus said. “Instead they resort to a calculated political ploy to appoint a passionate, but inexperienced, advocate to run a new agency with unprecedented power.”
Matt McCormick, a portfolio manager and banking analyst with Bahl & Gaynor, said Warren’s appointment was done more for political reasons than for correcting financial industry ills.
“I really doubt she will have the ability to bring people together considering the political nature of her appointment,” he said. “It is troubling.”
There is also potential for friction with Geithner. Warren clashed with him when she headed the watchdog agency overseeing the government’s $700 billion financial bailout program.
But Geithner attended her appointment ceremony and, in a statement issued later by the White House, praised her as a consumer protection pioneer.
While she may have the president’s ear, there are questions about whether bypassing the confirmation process will put legal constraints on what she can accomplish.
The U.S. Chamber of Commerce slammed the method of her appointment as “an affront to the pledge of transparency and consumer protection.”
Additional reporting by Patricia Zengerle, Caren Bohan, Ross Colvin and Diane Bartz in Washington, Steve Eder in New York, and Joe Rauch in Charlotte, North Carolina; Writing by Matt Spetalnick; Editing by Stacey Joyce, Leslie Adler, Tim Dobbyn