WASHINGTON — The White House is considering appointing Elizabeth Warren as interim head of the Consumer Financial Protection Bureau, bypassing a likely Senate confirmation battle, according to sources.
Under the Dodd-Frank regulatory reform law signed July 21, the Treasury Department has the power to appoint a temporary head of the new agency until a permanent one is nominated and confirmed.
By naming Warren interim head, the White House would sidestep — for now — a likely fight over her nomination. Obama can still choose to formally nominate Warren sometime next year, or select another candidate if she becomes too polarizing.
Warren supporters are urging the White House to make the appointment quickly, which would give the Harvard professor time and authority to get the new agency running.
"We would like the appointment fast-tracked because of the need to establish the bureau and set standards for the industry," said David Berenbaum, chief program officer for the National Community Reinvestment Coalition.
Sources cautioned the White House has not made a final decision yet and could still pursue other options, including nominating Warren directly without an interim appointment or choosing an alternative candidate.
But picking Warren as an interim head would have some advantages for the administration. For one, nominations take significant time to work through the Senate process, and it is virtually impossible for Warren to be confirmed before the November elections. Moreover, Warren has to submit to a nomination hearing at which Republicans would likely try to portray her as too liberal for the bureau job. Naming her interim head would put her in place immediately and avoid the confirmation process.
Still, although the regulatory reform law permits the appointment, some warned lawmakers would view it as a sort of recess appointment, which allows the president to appoint someone temporarily to a key job without Senate confirmation.
"I think an interim director who has not already been confirmed by the Senate carries the same baggage as a recess appointment," said Judy Kennedy, president and chief executive of the National Association of Affordable Housing Lenders. It is "probably not a good way to start this agency."
Some argued it could even undercut her effectiveness.
"She certainly could be put in there, but I do think if you do that it looks like you are trying to fill an appointment and trying to bypass the Senate," said Mark Calabria, a former Senate GOP aide and now director of financial regulations studies at the Cato Institute. "I think there is an expectation that any interim person does not have the legitimacy to set broad policy changes."
But other industry observers said Warren's appointment would be viewed differently, since Dodd-Frank expressly allows Treasury to appoint CFPB staff.
"It's hard to see how this would be seen as an end run around Senate confirmation, because they would still need to put a director forward once they formally launch the agency," said Jaret Seiberg, an analyst at Washington Research Group, a division of Concept Capital. "Every administration has carte blanche to bring in outsiders to help them with special projects, so bringing Warren in that capacity isn't likely to be earth-shattering."
Some bloggers have already been pushing an interim appointment. Huffington Post ran an item immediately after the bill was passed urging Obama to make such a move. More recently, Simon Johnson at The Baseline Scenario also recommended the administration use the move to appoint Warren as the head of CFPB.