What is Elizabeth Warren’s new role?

President Obama announced today that legal scholar Elizabeth Warren will lead the efforts to found the new Consumer Financial Protection Bureau (CFPB) created by the new financial reform law.

The move has raised eyebrows around Washington, since Obama has essentially created a new advisory post for Warren, who presently heads the Congressional Panel on TARP Oversight. The idea in the administrative reshuffling atop the new agency is to sidestep what the administration decided would be a contentious and possibly losing Senate confirmation battle. As "assistant to the president" and "special adviser" to the Treasury, Warren won't run the agency outright, Obama says. Rather, as the president explained in today's announcement, she will help pick the person who eventually will.

So why are Warren and the White House's approach controversial? And what will she, and this new agency, really do?

Why is the appointment controversial?

Obama credits Warren with originating the idea for what became the Consumer Financial Protection Bureau in an article she wrote in 2007.

But Warren is by no means universally loved; her strong pro-regulation stance has alienated some on Wall Street. The United States Chamber of Commerce, which argues Warren is anti-business, called the move "an affront to ... transparency."

Opponents worry that Warren's murky job description may lead to unprecedented regulatory powers in the financial sector. "Presumably, she can do just about anything," David Hirschmann, one of the Chamber's leaders, said.

But even those who support Warren find Obama's appointment technique a bit odd, since it leaves the bureau in something of a state of limbo. Connecticut Democratic Sen. Chris Dodd, sponsor of the bill that created the new consumer protection agency, told the New York Times that the agency "needs a director. It needs a leader. We still need a nominee to run the place."

So if she's not the head of the agency, what will Warren do?

It's not all that clear, according to the Wall Street Journal. Warren will not have the powers of a Senate-confirmed leader of the agency — but it's still not certain that she'll be advising Treasury officials in creating the agency or taking over the effort to create the agency altogether.

Here's how the Journal lays out what the agency is authorized to do:

The law gives the new agency broad powers to write and enforce rules related to almost any consumer financial product, including mortgages and credit cards. The agency can examine large banks and mortgage lenders for compliance with these rules, potentially hitting businesses with fines. Many of its powers and personnel are expected to be transferred from existing agencies such as the Federal Reserve and Office of the Comptroller of the Currency. The agency would draw its budget from the Fed.

Until a head of the agency is confirmed, the paper explains, "much of the work at the CFPB will be planning and structural decisions as opposed to examinations and enforcement."

[Related: Goolsbee tapped by Obama to be White House economist]

Ultimately, it seems, Treasury Secretary Timothy Geithner is in charge of how the agency operates. That might be a tad awkward, since Warren has grilled him over his role in the bank bailouts during TARP oversight-panel hearings. As the bailout watchdog, Warren also criticized Geithner and the Treasury for not doing more to help American homeowners avoid foreclosure.

The two have apparently made up and are friends now, according to the Journal.

Warren wants to be 'a tough cop on the beat'

Warren has drawn the ire of Wall Street for criticizing the allegedly abusive lending practices of financial institutions. She's attacked the enormous scale of the federal bailout for banks, while noting that many Americans who signed on to subprime mortgages were left without help.

In a Wall Street Journal op-ed from February, she urged Wall Street CEOs to sign onto financial reform, or else history will remember them as "the bonus babies who were so short-sighted that they put the economy at risk and contributed to the destruction of their own companies."

In a blog post announcing her new role, Warren sent a similarly tough message to the financial industry.

"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," she said. "The time for hiding tricks and traps in the fine print is over."

[Financial reform: What the new credit card rules mean for you]

How does this fit into Obama's larger strategy?

Obama is emphasizing the agency in order to publicize the reach of the financial reform bill, one of his legislative achievements that remains popular, despite strong Republican opposition in Congres.

He is also probably hoping to fire up his progressive base, who largely like Warren and her advocacy for middle-class consumers.

"Basically, the Consumer Financial Protection Bureau will be a watchdog for the American consumer, charged with enforcing the toughest financial protections in history," Obama said today. "Never again will folks be confused or misled by the pages of barely understandable fine print that you find in agreements for credit cards, mortgages, and student loans."

(Photo: Elizabeth Warren/AP)

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