Warren's idea gained steam in Congress and culminated in a Consumer Financial Protection Bureau being incorporated into the financial regulatory reform bill that was enacted in summer 2010.

The law established an independent body within the Federal Reserve designed to protect borrowers from risky mortgages, credit cards and other consumer loans. The entity would have its own funding and a presidentially-appointed, independent director with a seat on the board of the Federal Deposit Insurance Corporation.

Warren was a leading contender to lead such a body, despite her thorny relations with banks and Treasury officials.

But Warren's nomination proved controversial, and the White House was concerned she would not be confirmed by Republican Senators supportive of Wall Street. In September 2010, President Obama named her a special assistant and charged her with standing up the bureau, reporting both to him and to Treasury Secretary Timothy Geithner. Warren's tasks include everything from selecting a permanent CFPB head to outlining the bureau's policy goals. Best of all, the positon required no Senate confirmation.

February 2009 Report

In February 2009, the COP released a biting report on the Treasury's handling of the first $300 billion worth of bailout funds used to purchase preferred shares of struggling financial institutions and car companies.

Warren sharply criticized Bush Treasury Secretary Henry Paulson's lack of transparency and his performance. The "Treasury simply did not do what it said it was doing,'' said Warren at a February 2009Senate Banking Committee hearing in February 2009.

The COP panel found that the Treasury had overpaid for the assets it bought from banks. In the report, the panel said the Treasury funneled $254 billion to troubled financial institutions for assets that were only worth $176 billion. This meant taxpayers overpaid to the tune of $78 billion. All the while, Paulson had pronounced to Congress that the taxpayers might ultimately profit from the massive bailout. "This is an investment, not an expenditure, and there is no reason to expect this program will cost taxpayers anything," said Paulson in October 2008.

When investing, the Treasury also used a uniform price scheme that failed to account for the overall health of a specific financial institution. By using a universal pricing scheme, the government did not account for the risk of failure, judging each bank as a separate investment.

"The best way I can explain it would be is if we had 10 paintings in front of us and I announced that I was going to pay a million for each painting. And one was a Picasso, and, you know, one was a Rembrandt and the other seven were not," said Warren. "They did not price for risk. That's what markets do."

Two-Income Families and Bankruptcy

An advocate of the middle-class, Warren wrote a 2003 book with her daughter, Amelia Warren Tyagi, called "The Two-Income Trap: Why Middle-Class Mothers and Fathers Are Going Broke." In it, the pair adopts the controversial belief that families with two incomes are actually less well-off financially than families in the 1970s, when often only one member of the family worked.

Women should still work if they are so inclined, the authors (two working women themselves) argue, but they may not end up in better financial shape. The authors demonstrated that two-income families tend to take on higher fixed expenses like more expensive mortgages, which leave little financial cushion if one member of the family loses their job. In the past, an abrupt loss of income could be compensated for by the other family member sought a low-paying job until that income could be replaced. But now, the two members of a family can't make up for the sudden jolt of losing a single income.

Including higher mortgage payments, car payments and tuition payments, the average two-worker home now has less money to spend than a family with one breadwinner in the 1970s. Warren and Tyagi concluded that is the reason why two-income middle-class households report a higher rate of bankruptcy than one-income middle-class homes in the 1970s.

"Every new report on consumer debt or bankruptcy blames families for frivolous buying," said Warren. "Our data show families in financial trouble are working hard, playing by the rules and the game is stacked against them."

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