July 26, 2011 / 9:03 PM / 8 years ago

Elizabeth Warren to leave consumer financial agency

WASHINGTON (Reuters) - Elizabeth Warren, the law professor who persuaded the Obama administration to create the Consumer Financial Protection Bureau, will step down on August 1 from her role setting up the controversial new regulator, the Treasury said on Tuesday.

Elizabeth Warren, Assistant to the President and Special Advisor to the Secretary of the Treasury, testifies at a hearing about oversight of the Consumer Financial Protection Bureau of the U.S. House Oversight and Government Reform Committee on Capitol Hill in Washington, May 24, 2011. REUTERS/Jonathan Ernst

Warren will return to Harvard Law School and will be succeeded by a close aide and former banker, Rajeev Date.

The agency officially opened its doors for business on July 21 but still does not have a confirmed leader.

Last week, President Barack Obama nominated Ohio’s former attorney general, Richard Cordray, to be the bureau’s first director.

Senate Republicans, however, say they will block his nomination unless changes are made to the bureau, changes that Democrats contend will weaken the fledgling agency.

Warren had been setting up the agency as a special advisor to Treasury Secretary Timothy Geithner. Date will now assume that role and run the bureau’s day to day operations, the Treasury Department said.

Geithner said in a statement that Warren had done an extraordinary job in getting the bureau running.

“Her efforts to simplify mortgage and credit card disclosures, protect military families from abusive and deceptive financial practices, and bring aboard top talent like Richard Cordray and Raj Date have built a strong foundation for the Bureau’s future success.”

Liberal groups and many Democrats were upset that Obama did not nominate Warren for the director job and are now pushing her to run for the U.S. Senate in Massachusetts against Republican Scott Brown.

Supporters have touted the bureau as a cop on the beat who can prevent the type of problems in lending markets that helped lead to the 2007-2009 financial crisis.

The agency was opposed by the banking industry and many Republicans who contend it will have virtually unchecked power and could restrict banks’ ability to lend.

Warren, who conceived the idea for the bureau, become a lightning rod for these complaints.

She made efforts to reach out to the banking industry and won over some officials, particularly among community bankers.

She had less success with congressional Republicans who, particularly in the House, made a show of challenging her policy proposals and role in a mortgage servicing probe at recent congressional hearings.

Republicans say their problem is with the bureau not Warren.

Without a director the bureau cannot exercise all of the powers it was provided by the 2010 Dodd-Frank financial oversight law.

For example, the agency cannot begin regulating non-bank lenders, like payday lenders, until a director is in place.

Reporting by David Lawder; Editing by Leslie Adler and Tim Dobbyn

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