July 21, 2010 / 11:33 PM / 9 years ago

Geithner: Warren would be good consumer watchdog

WASHINGTON (Reuters) - U.S. Treasury Secretary Timothy Geithner said on Wednesday that Elizabeth Warren has the credentials needed to head the new Bureau of Consumer Protection set up as part of a landmark financial reform overhaul.

In an interview on PBS’ “Charlie Rose Show,” Geithner was asked whether Warren was Treasury’s top candidate for the consumer watchdog post but said it was President Barack Obama’s decision to make.

“Let me just say she is an incredibly capable, effective advocate for reform,” Geithner said. Treasury has denied rumors of conflict between Geithner and Warren, a Harvard law professor who heads a congressional panel overseeing the 2008 bank bailout program and who has sharply criticized banks.

White House spokesman Robert Gibbs said earlier on Wednesday that Warren would be a “terrific” nominee to head the agency.

The position is considered a key one but the timing of an appointment is unclear and there are other potential candidates besides Warren, though Geithner offered lavish praise.

“She was way ahead of her time, way ahead of the country in pointing out what was actually happening in the credit busies,” Geithner said of Warren. “So like I say, I think she’d do a great job in that position.”

The new consumer protection bureau is to be housed within the Federal Reserve, according to terms of the U.S. financial regulatory rules signed into law by President Obama on Wednesday.

Geithner, who played a key role in negotiating with lawmakers to reach agreement on proposals that could clear Congress, said the country would never again have to face the uncertainty it did when big companies like insurer AIG and former Wall Street firm Bear Stearns brought themselves to the edge of failure through excessive risk-taking.

“It’ll give the government the tools to dismember them safely without the innocent, with the rest of the economy, without the taxpayer having to bear the costs of propping them up,” he said. “That’s the fundamental achievement of this bill.”

In response to questions, Geithner admitted to some regrets about the proposals, particularly that car dealers were allowed to escape the oversight of the new consumer-protection bureau.

“That’s a battle we lost, but fundamentally we got what we needed to get,” he said.

Some Republicans remain critical of the new financial-sector rules, charging they will crimp U.S. companies’ ability to compete globally and pledging to make it an issue in campaigning for this November’s congressional elections.

Geithner turned aside a question whether the administration might face lasting ire from the business community and Wall Street as a result of stiffened financial rules.

“What you’re seeing today, of course there’s nothing remarkable in this, is that businesses would like to be able to operate with less regulation, Fewer constraints and, of course, lower taxes,” Geithner said.

Reporting by Glenn Somerville, editing by Leslie Gevirtz

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