- Associated Press - Thursday, September 16, 2010

WASHINGTON (AP) — President Barack Obama has named Wall Street critic Elizabeth Warren to help oversee creation of a new agency to look out for the interests of consumers in their dealings with banks, mortgage companies and other financial institutions.

Obama says the agency was Warren’s idea so it only makes sense that she be “the architect” working with Treasury Secretary Timothy Geithner to get it up and running.

Despite her many critics on Wall Street and in the financial industry, Obama says that both he and Geithner agree that Warren is the best person for the job.

Hours before Mr. Obama’s official announcement, Ms. Warren wrote in a post on the White House blog that the purpose of the bureau is to ensure that people should be able to read their credit card and mortgage contracts and “know the deal.”

“They shouldn’t learn about an unfair rule or practice only when it bites them, way too late for them to do anything about it,” she wrote. “The new law creates a chance to put a tough cop on the beat and provide real accountability and oversight of the consumer credit market.”

Ms. Warren, a 61-year-old Harvard University professor who describes herself as “not a Washington person,” will report to both the president and Treasury Secretary Timothy Geithner. Because she is not being named the bureau’s permanent director, Ms. Warren can assume her duties immediately.

Ms. Warren designed the advisory role during long conversations with White House officials, a person familiar with her thinking said. The person insisted on anonymity to discuss private conversations.

Ms. Warren has spent the past two years running the Congressional Oversight Panel, charged with monitoring the Treasury Department’s handling of the $700 billion bank rescue fund known as the Troubled Asset Relief Program.

The financial regulation law that Mr. Obama signed earlier this year gives the Treasury Department the authority to run the consumer protection bureau while the nomination of its director is pending. Control must be transferred to the new bureau within a year, but the secretary has the latitude to seek an additional six months to complete the creation of the agency. That means Ms. Warren could perform her new duties into 2012.

Senate Banking Committee Chairman Chris Dodd, who has questioned whether Ms. Warren would have enough support to win confirmation, said Thursday the White House was within its rights to name Ms. Warren as an adviser and expert.

But he added on Bloomberg television, “We need a director. We’ve got to have someone who is confirmable. The law requires that there be a director of this bureau of consumer financial protection and that that nominee be confirmed by the Senate.”

Asked whether Ms. Warren would effectively be serving in that capacity, Mr. Dodd replied: “You can’t do that. You’ll end up with too much opposition. … I’d be totally opposed to someone on a backdoor operation here. We need to build consensus to this bureau.”

Mr. Obama plans to eventually name a permanent director, though an announcement isn’t thought to be imminent.

Associated Press writers Jim Kuhnhenn and Daniel Wagner contributed to this report.