Obama bypassing Warren for consumer bureau, officials say

Harvard professor faced opposition from the GOP

Bloomberg News / July 16, 2011

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WASHINGTON - President Obama has chosen a candidate other than Elizabeth Warren as director of the new Consumer Financial Protection Bureau, according to a person briefed on the matter.

The president’s choice already works at the consumer agency, the person said yesterday. Obama may make the nomination as soon as next week, another person briefed on the administration’s plans said.

The people, who spoke on condition of anonymity because the process is not public, did not give the name of the choice.

Last fall, Obama appointed Warren, a Harvard law professor, to set up the consumer bureau until a director was named. Warren, one of the nation’s leading experts on the effect of bankruptcy on American families, had been the architect of the bureau, one of the cornerstones of the Dodd-Frank package of Wall Street regulations following the 2008 credit meltdown.

The consumer bureau, which is to begin formal operations Thursday, was established to fill a gap in oversight of products whose abuse contributed to the crisis, including mortgages and credit cards.

Warren also served as head of the congressional watchdog panel overseeing the TARP bank bailout.

Known for a plain-spoken bluntness and relentless advocacy for consumers, Warren has become a polarizing figure, showered with accolades from groups supporting working-class families and criticism from Republicans and some Wall Street bankers.

She has been vigorously campaigning to keep the GOP-controlled House from diluting the bureau’s powers, including talking with community bankers in every state and meeting with hundreds of business and consumer representatives. Preparing for the agency’s opening, she supervised the hiring of more than 300 people.

The bureau, however, cannot write rules to govern consumer finance until a director is nominated and confirmed in the Senate.

In May, 44 Republican senators announced they would not vote to approve any candidate to run the bureau unless its management structure is changed, with some calling for a five-person commission to replace the director position.

Warren has told The New York Times that opponents are trying to stick “a knife in the ribs of the agency.’’

“The fight has now shifted. It didn’t stop, it just moved from being a fight out in the headlines, out in the middle of the street, to a fight in the back alleys,’’ she said.

Consumer bureau spokeswoman Jen Howard declined to comment on whether Warren would be bypassed. The White House did not immediately respond to a request for comment.

Raj Date, a top deputy to Warren at the consumer bureau, was on a short list of candidates to become director, a person briefed on the process said last month.