Elizabeth Warren Gets Praise From Geithner; Will She Get New Job?

Who will President Obama pick to lead the new consumer watchdog agency?

July 21, 2010, 4:02 PM

July 22, 2010 -- Treasury Secretary Timothy Geithner has frequently clashed with Wall Street bailout watchdog Elizabeth Warren, but today he praised her work on financial reform and said she would be "a very effectively leader" of the powerful consumer protection agency to be created under the new Wall Street reform law.

"She is one of the most effective advocates of reform in the country," Geithner told reporters at a breakfast sponsored by the Christian Science Monitor. "She has enormous credibility. ... I think she would be an very effective leader of that institution."

But even as he praised Warren, Geithner made it clear he has not endorsed her to run the agency.

"You heard me praise her as an effective leader," Geithner said. "We have not yet made a recommendation to the president" about who should run the new agency.

The White House has mentioned two others as possible candidates for the job: Treasury official Michael Barr and Eugene Kimmelman at the Justice Department.

"Those are excellent candidates," Geithner said, referring to Barr and Kimmelman. "And I am sure there are others too."

In her role as the head of a Congressional oversight panel on the banking bailout, Warren has been unsparing in her criticism of Geithner's Treasury Department. Just this week she slammed Geithner's $75 billion foreclosure prevention program, telling a Senate panel on Wednesday that the foreclosure program is "behind the curve" and, "We need a program with far more urgency and some real teeth in it."

Some prominent lawmakers, progressives and labor unions in Washington want the White House to tap Warren, who is also a Harvard Law professor and has led the charge for greater consumer protections. That would make sense -- after all, the agency was Warren's brainchild. It was Warren who in 2007 proposed the creation of "a new regulatory body to protect consumers who use credit cards, home mortgages, car loans and a host of other products."

Despite Geithner's praise today, it is clear that some members of the administration don't want Warren to be offered the post and, perhaps just as importantly, some members of Congress believe she could be too controversial to win Senate confirmation.

Sources have told ABC News that Geithner has had concerns with Warren, especially for her criticism of the Obama administration's handling of TARP.

Senate Banking Committee Chairman Chris Dodd has raised doubts about support for Warren on Capitol Hill.

"Elizabeth, I think, can be a terrific nominee. The question is, 'Is she confirmable?'" Dodd said in an interview on National Public Radio earlier this week. "And I think there's a serious question about it."

That way of thinking, noted syndicated progressive newspaper columnist David Sirota, raises the question: What is the definition of "controversial" in today's Washington?

Counterintuitively Controversial

Why should Warren be considered a risky choice to run the agency she first proposed when other top administration officials such as Geithner, Commodity Futures Trading Commission chief Gary Gensler, and Office of Management and Budget director nominee Jacob Lew were not?

Geithner, of course, was in charge of the New York Fed when the financial system imploded in the fall of 2008, while Gensler is a former Goldman Sachs executive and Lew a former Citigroup executive.

"The closer you are to the for-profit institutions that brought our economy to the brink, the easier it is for you to get a job in Washington. The more independent you are from those institutions, the more controversial a figure you are," Sirota told ABC News.

Warren is nothing if not independent. As the head of the Congressional Oversight Panel, a government watchdog created to oversee the controversial $700 billion Wall Street bailout, Warren routinely has criticized policies and decisions at Geithner's Treasury.

Her tenacity was on full display Wednesday when she ripped the foreclosure prevention program at a Senate Finance Committee hearing.

Blunt talk is par for the course for Warren, but not for Washington, where reports usually are written with more subtle language, composed in a type of hidden code. Warren likes to recall that in early 2009, an official on the Hill told her that one of the panel's initial reports was "too direct," suggesting that she take a more diplomatic approach.

"Well then what's the point?" replied Warren.

Since then, the Oklahoma native has stuck to her guns, even if it jeopardizes her possible appointment and confirmation to run the agency she has fought so hard for.

"This plain-spoken Oklahoman-speak that she uses is not what Washington's used to," a source familiar with the matter told ABC News. "She could be controversial because she's not attuned to the traditional way of doing business in Washington."

Future: Tense

With her future the subject of a growing debate inside the Beltway, Warren knows she will be ultimately be picked or not -- and confirmed or not -- based on her body of work over the past few decades.

"She's going to be judged on her decades of academic scholarship and her abilities," the source told ABC, "and this idea that she might be found controversial is sort of inconsequential to her."

The financial industry, for its part, would like Obama to pick someone more likely to see their side of the issue, not just the consumers' side.

"We believe the Consumer Financial Protection Bureau should focus on both ends of the transaction," said Scott Talbott, chief lobbyist for the Financial Services Roundtable in Washington.

But if Obama wants to implement "the strongest consumer financial protections in history," as he called them on Wednesday, then progressives such as Sirota believe Warren should be the obvious choice to run the new bureau.

"The status quo has a reason to be nervous about Elizabeth Warren," Sirota said. "She is independent, she is eminently qualified, and she knows what problems need to be fixed. People who want to preserve the status quo are right to be worried that she'd challenge them, so it makes sense for them to challenge her confirmation by saying that she'd be too controversial."

At a time when the Wall Street reform bill has been denounced by some on the far-left for not doing enough to crack down on the financial system, the White House could win some liberal support by picking Warren.

"She has become a rallying point," Sirota said. "She'd go a long way towards selling that this bill is real progress."

On Wednesday, only 45 minutes into the Senate hearing, Warren got up from the witness table and headed for the exits. She had a more pressing engagement.

"I apologize for leaving and thank you all very much," she told the panel.

Warren had to go watch the president sign the new bill into law, the bill that will create the new agency that she fought so hard to establish. Now the only question that remains is: who will run it?

ABC News' Jake Tapper contributed to this report.

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