White House Considers Naming Warren 'Interim' CFPB Head
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.
Warren has been the front-runner for the post since she first floated the idea of creating a consumer protection agency in 2007. But she has proved to be a polarizing figure with the banking industry and among some lawmakers.
It is unclear if she could garner the 60 votes needed in the Senate, particularly if, as expected, the Republicans gain seats in the midterm elections in November. (The White House has said Warren is confirmable, but Senate Banking Committee Chairman Chris Dodd has expressed doubts.)
But the administration is under pressure to get the CFPB on its feet quickly. The Dodd-Frank law gives the Treasury only a year to form the bureau, and the agency has already begun consulting with outside officials on an interim basis. The administration must publish a formal transfer date for the CFPB, when the agency assumes responsibility for consumer protection laws and formally asserts its authority, by Monday.
Consumer groups said a director, interim or otherwise, is needed.
"It's hard to imagine this agency will hit the ground running without someone in place long before the official transfer date," said Travis Plunkett, legislative director for the Consumer Federation of America. "There are just too many important policy decisions being made."
Although Warren is only one of several rumored candidates, many observers saw Obama's comments on Friday praising the professor as proof he intends to choose her for the CFPB post. Calling her his "dear friend," Obama said an announcement would come soon. A decision is likely to be announced within the next week, sources said.
The White House and a spokesman for Warren declined to comment.
At the news conference last week, Obama also raised concerns about any nominee's confirmation prospects, fueling more speculation the White House would make an interim appointment instead.
"I am concerned about all Senate confirmations these days," Obama said. "I've got people who've been waiting for six months to get confirmed who no one has an official objection to and who were voted out of committee unanimously and I can't get a vote on them. And it's very hard when you have a determined minority in the Senate who insist on a 60-vote filibuster on every single person we are trying to confirm."
Observers said it is clear Warren is the choice.
"I think after Friday's press conference there is very little doubt it won't be her," said Brian Gardner, a political analyst at Keefe, Bruyette & Woods Inc.