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Obama decision to avoid confirmation battle for Elizabeth Warren is hailed and criticized

Putting Warren in an interim position to shape the new Consumer Financial Protection Bureau is praised by supporters as a bold step and decried by some senators as an end run around the confirmation process.

September 17, 2010|By Jim Puzzanghera and Peter Nicholas, Los Angeles Times

Reporting From Washington — President Obama's decision to avoid a confirmation battle and name Elizabeth Warren to an interim position to launch the Consumer Financial Protection Bureau was cheered Thursday by her supporters as a bold step to allow her to shape the powerful but controversial agency she conceived.

"It's a very creative way to put Elizabeth where she ought to be — running the agency," said House Financial Services Committee Chairman Barney Frank (D-Mass.) Warren was not interested in being appointed to the five-year term as director, he said.

Still, some senators criticized the decision to bypass the traditional nomination process, a move that could harm the new agency's image.

"This is … the czar of all czars," said Sen. Bob Corker (R-Tenn.), who called Obama's move "inappropriate" and an "overreach."

Obama, concerned that that Republicans already were stalling confirmations of many non-controversial nominees for other posts, decided that nominating the outspoken Harvard Law School professor as director would hobble the agency's start-up as she waited months for a vote and possibly was blocked from the job.

The agency is the centerpiece of the sweeping financial reform legislation, and Obama believed its job protecting consumers from abusive practices by banks, credit card companies and other lenders was too important to risk a delay, said an administration official who spoke on condition of anonymity because the announcement has not been made.

So Obama on Friday will name Warren as an assistant to the president and a special advisor to Treasury Secretary Timothy F. Geithner with the task of overseeing the creation of the agency. Neither position requires Senate confirmation.

Warren's supporters in Congress, consumer advocates and liberal groups praised the move to keep opponents from blocking her appointment. As a strong consumer advocate who originated the idea of such an agency, she is the best choice to launch it, they said.

But in bypassing the Senate's confirmation process, Obama has increased concerns about the agency's broad powers.

Many Republican senators and industry groups already were worried that there were few checks on the agency, which unlike most government bodies has an independent funding stream that prevents Congress from exercising strong oversight by threatening to cut off money.

"This is exactly, exactly the kind of thing that I was concerned about as we set up this … agency," Corker said.

And some opponents worried that Obama's decision to appoint Warren to a senior White House position in addition to one at the Treasury, which is responsible for setting up the agency, could allow the administration to use executive privilege to prevent her from even testifying before Congress.

Obama's move also could make it more difficult to get a director confirmed by senators angry that their authority has been circumvented. That could hinder the agency's ability to perform its duties once Warren gets it running.

Sens. Susan Collins and Olympia J. Snowe, moderate Republicans from Maine who provided pivotal votes to pass the financial overhaul bill, both criticized the Warren appointment.

"This is clearly a disingenuous effort to circumvent the Senate confirmation process," Collins said. "The last thing we need is another 'czar' that is unaccountable to Congress and the American people."

Even Senate Banking Committee Chairman Christopher J. Dodd (D-Conn.), who along with Frank led the effort to pass the legislation and create the agency, appeared frustrated Thursday by Obama's decision.

"They still need to have a nominee," said Dodd, who has raised concerns about Warren's ability to be confirmed. "We need a director and we need someone that's confirmable, and anything short of that … you're going to put this bureau in some jeopardy."

Under the financial overhaul law, Geithner is authorized to "perform the functions of the bureau" until a director is confirmed. The Treasury Department already has a team working to set up the agency, including finding office space.

Within days, Geithner must announce the date that powers from other agencies, such as the Federal Reserve's authority to write consumer protection rules for the financial industry, will shift to the new agency. That date must be six months to a year after the bill was signed in July, with an option to extend the transfer another six months.

Geithner will designate Warren to set up the agency, and she could run it on an interim basis until a director is confirmed by the Senate, Frank said.

"Her goal was to be the one who helped set the agency up and she didn't want to be a long-termer there," Frank said. "She is very satisfied with this arrangement."

A spokesman for Warren declined to comment.

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