By Brady Dennis
Thursday, September 16, 2010; 1:00 AM
President Obama this week plans to name Harvard law Professor Elizabeth Warren as a special adviser so that she can oversee a new consumer financial protection bureau while avoiding a potentially vicious Senate confirmation fight, according to people with direct knowledge of the decision.
The appointment would place Warren - adored by liberals and consumer advocates, viewed with suspicion by many bankers and congressional Republicans - in charge of the new regulator that she proposed three years ago to protect Americans against lending abuses.
Warren is expected to take on a dual role as assistant to the president and special adviser to Treasury Secretary Timothy F. Geithner, giving her primary responsibility for shaping the consumer watchdog in the coming months.
The financial overhaul bill signed into law in July gives the new bureau and its leader broad autonomy to write and enforce rules governing credit cards, mortgages and other such loans.
Under the law, the Treasury maintains responsibility for setting up the new regulator until the president nominates a director, subject to approval by the Senate.
By appointing Warren to a post within the administration - much as the White House did with "car czar" Steven Rattner and "compensation czar" Kenneth Feinberg - Obama would free her to act as the bureau's director beginning immediately while avoiding a confirmation battle. The move also will thrill the consumer groups, labor unions, academics and liberal lawmakers that have lobbied relentlessly for her to lead the new regulator.
The administration's plan to appoint Warren was first reported by ABC News.
The decision on one of the most anticipated appointments of the Obama presidency emerged after numerous conversations with Warren and weeks of hand-wringing over which approach to take.
Scores of Obama nominations far less polarizing than Warren's have languished in the divided Senate for months. Warren herself has told allies on Capitol Hill that she would prefer to avoid a prolonged confirmation process.
In addition, Senate nominees traditionally have maintained a low public profile while awaiting confirmation. White House advisers decided that it would be unwise to sideline Warren, given her capacity as an outspoken consumer advocate and the immediate demands of starting a federal agency from scratch.
They also decided against placing Warren in the director's post through a recess appointment, which would have allowed her to serve at least a year without confirmation.
Still, the choice to bypass the Senate promises to infuriate lawmakers of all stripes.
"This is clearly a disingenuous effort to circumvent the Senate confirmation process and I oppose it," said Sen. Susan Collins (R-Maine). "The last thing we need is another 'czar' that is unaccountable to Congress and the American people. This is certainly not what Congress intended when it created this important position."
Senate Banking Committee Chairman Christopher J. Dodd (D-Conn.), who shepherded the landmark financial legislation through the upper chamber, said this week that such a move could jeopardize the credibility of the fledgling consumer bureau.
Others, such as Sen. Bernie Sanders (I-Vt.), applauded the president's decision. "The American people are tired of being ripped off by large banks and financial institutions," he said in a statement. "In Professor Warren, they finally will have someone in a position of power who can protect their interests."
Many Republicans and members of the financial industry have questioned her qualifications to manage a large bureaucracy and expressed fears that she is an ideologue bent on punishing the banking industry.
At the same time, multiple financial industry representatives - including executives at the Financial Services Roundtable, the Independent Community Bankers of America and the Consumer Bankers Association - have sought out meetings with Warren, trying to lay the foundations of a working relationship.
Warren, 61, is expected to uproot from Cambridge, Mass., where she recently pulled out of teaching this fall, and live in Washington full time. Her husband, fellow law professor Bruce Mann, is expected to continue teaching at Harvard.
The new position won't be her first role in Washington. Warren served as a senior adviser to the National Bankruptcy Review Commission in the 1990s, and during the past two years she has led the five-member Congressional Oversight Panel.
Already, dozens of federal employees are focused full-time on setting up the new consumer bureau, and that number is expected to grow rapidly in coming months.
Officials have settled on temporarily quarters for the new watchdog in an office building at 18th St. and L St., a short walk from the White House and Treasury.
The building houses the Office of Financial Stability. But as the government's massive bank bailout program fades away, so with the staffers working on it, leaving room for Warren and her crew.
Staff writer Zach Goldfarb contributed to this report.