A long-simmering dispute over a powerful new consumer protection agency created in last year’s landmark Wall Street reform law broke out into a full-fledged political battle last week as Senate Republicans moved to prevent the White House from installing a new czar at the agency.
With Democrats and their liberal allies urging President Obama to use the Memorial Day recess to appoint consumer advocate and Harvard professor Elizabeth Warren to head the Consumer Financial Protection Bureau to avoid a Senate confirmation fight, Republicans on Thursday moved to prevent the Senate from recessing — making it impossible for Mr. Obama to install her or a number of other controversial nominees to unfilled posts.
“President Obama has been packing agencies with left-wing ideologues, but thankfully he won’t be able to for at least the next week,” said Sen. Jim DeMint, South Carolina Republican, after he and other Senate conservatives convinced the House Republican leadership not to send the Senate an adjournment resolution. “No controversial nominees will be allowed to circumvent the confirmation process during the break.”
Just before the Senate blockade, 43 House Democrats had written Mr. Obama urging the recess appointment of Ms. Warren, who has been working behind the scenes for a year to prepare the powerful new agency for its launch in July.
Liberal groups had gathered more than 100,000 signatures on a petition and thousands more fans on websites backing Ms. Warren, whose antagonistic relationship with the banking industry has provoked Republicans.
Before agreeing to appoint her or anyone else to head the new consumer bureau, Republicans want to restructure the agency to be less autonomous and powerful. Currently, it is slated to become a staunchly independent new arm of the Federal Reserve, funded from earnings on the Fed’s market operations rather than through congressional appropriations, thus insulating it from oversight and pressure from Congress.
The House is moving to pass legislation to turn the bureau into a commission more like the Securities and Exchange Commission or the Federal Trade Commission, which have five members divided between the parties, are funded by Congress and are considered more accountable to the legislature.
Mr. Obama would be seen as defending homeowners and consumers burned by Wall Street during the economic crisis, they say, while Republicans could be tarred for doing the bidding of big banks that are highly unpopular with the public.
The White House and Treasury Department, which aides note already have their hands full this year managing major disputes with Republicans over the budget, health care and taxes, have been mum about who they plan to appoint to the agency and never openly committed to a recess appointment of Ms. Warren.
But Ms. Warren, who has been setting up the agency as a special assistant at the Treasury for the past year, is the only candidate who has been consistently discussed publicly and even some banking lobbyists think she is destined to head the agency.
Former House Banking Committee Chairman Barney Frank, Massachusetts Democrat, has urged the president to appoint her, noting that 44 Republican senators pledged last month to block anyone the president nominates unless the agency is restructured — removing any incentive for the White House to try to name someone more agreeable to Republicans.
Richard Eskow, a fellow at the Campaign for Americas Future, said Mr. Obama has a “civic duty” to appoint Ms. Warren, given that the agency was her brainchild and that she has shepherded it from its legislative beginnings to its imminent launch of operations.
He accused Republicans of “doing the banking industry’s dirty work” and “trying any low-rent tactic” to oppose Ms. Warren and the agency she helped create.