Is Half of an Elizabeth Warren Better Than None at All?

Elizabeth Warren proposed the creation of the Consumer Financial Protection Agency, which she now runs—sort of.

Image: Richard Clement/Reuters

Elizabeth Warren is bound to be a strong leader of the new Consumer Financial Protection Bureau. But by sidestepping the Senate confirmation process, President Obama may never get full value from the Harvard Law school professor who is feared on Wall Street.

As a special assistant to the president, Warren gets to set up the new agency that she proposed, and was created during the financial reform process. But she won't be the actual administrative leader of the group, and that may limit her ability to crack down on financial institutions. Her success will be a function of her personality as much as anything.

The tough talking Oklahoman, the daughter of a janitor, combines a powerful intellect with a populist prairie attitude. Her grandmother drove a covered wagon, and Warren exhibits a similar sort of grit, exhibited in her book The Two Income Trap. There will be no regulatory capture, here. She isn't a creature of Wall Street, the way Treasury Secretary Tim Geithner is.

But she doesn't actually run the organization that she runs, and that is going to be a political and administrative challenge.

The 61-year-old Warren, who knows the president through their shared connection to Harvard, would likely have been stuck in a protracted battle over confirmation. The election would have rallied opposition, and if the Republicans emerge from the November election with more power than they have today, the odds of her winning confirmation only will go down.

As an assistant to the president, instead of the actual leader of the bureau, she sidesteps the confirmation process. She can establish its agenda and maybe looking for a permanent head of the group. She still could be nominated in the future.

But the scope of what she can do as an assistant to the president, not to mention her political influence, may be muted as an assistant to the president. Without an actual leader, how is the bureau supposed to get down to business, imposing limits and sanctions on credit cards, loans and other financial products peddled to consumers?

"If Warren is given real power, this is great news," Becky Bond of the liberal group CREDO, told Reuters. "If she is not given the power to make change and hold Wall Street and abusive banks accountable, this maneuver is nothing more than inside-the-Beltway cleverness."

Actually, it might be more accurate to say that Warren's effectiveness will be a function of the power she takes, not the power she is given. Sharp and outspoken and with a personal link to the president, she will step into the position with a certain degree of clout.

She also is driven by passion for financial reform. Her father was cheated by a business partner years ago, so for her, financial reform is more than business or ideology. It's personal.