September 15, 2010 / 10:24 PM / 9 years ago

Obama to tap Warren as adviser on consumer agency

WASHINGTON (Reuters) - President Barack Obama plans to name Wall Street critic Elizabeth Warren to a special advisory role helping to set up the new 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 advocacy of tighter oversight of the financial industry but she is a heroine to liberal activists and consumer groups.

Several senators, including Senate Banking Committee Chairman Christopher Dodd and moderate Republican Olympia Snowe, have expressed reservations about installing Warren in a leadership role over 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. EDT 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, she felt it was appropriate to recuse herself,” a source familiar with the matter said.

Reporting by Caren Bohan, Ross Colvin and David Lawder; Additional reporting by Dave Clarke and Kevin Drawbaugh; Editing by Xavier Briand

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