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Elizabeth Warren: Too Bold to Fail? [VIDEO]

An inside look at this populist sheriff's first days at the new Consumer Financial Protection Bureau. Will Obama put her to full use?

| Fri Oct. 29, 2010 5:00 AM EDT

Whether or not Warren becomes a major strategic initiative of the administration, she has much to do. In her role as a presidential assistant, she has been discussing with the White House how to tackle the ongoing foreclosure crisis. She won't reveal the advice she shares with the president and his aides, but she notes that this foreclosure debacle is a "full-fledged scandal" that warrants a national state-by-state investigation and tougher enforcement of existing regulations. The way she talks about the president suggests they can develop a solid working relationship. They do not know each other personally. But Warren fondly recalls the first time she met Obama. There was a gathering at the home of one of Warren's Harvard law colleagues for a young Illinois state senator considering a campaign for the US Senate. Warren entered the house and saw a tall fellow with an athletic build, who quickly took her hand. The first words out of his mouth were "predatory lending," and he proceeded to tell her that he realized that the states were limited in dealing with the most outrageous lending practices and that one reason he wanted to become a senator was to halt such financial scamming. When he finished, Obama smiled and said, "What do you think?" She replied, "You had me at 'predatory lending.'"

In recent weeks, besides advising the president on yet another financial mess Warren has been poring over resumes, looking for talent to staff the CFPB; hundreds of people (including the chief) have to be hired in the next few months. She's been in meetings all over Washington—she maintains a prestigious office in the Treasury building for her most important one-on-ones—with the heads of the seven federal agencies transferring authority to the CFPB, with senior Democrats and Republicans on the Hill, with consumer advocates, and with the bankers. She's continued her never-ending media blitz, appearing on various cable shows and The View. She's been talking to state officials about how to respond to the mortgage-servicing scandal, and trying to figure out how the bureau can immediately pursue its campaign to simplify mortgage and credit card agreements—even before the agency is fully formed.

Before Obama selected Warren to be the CFPB's midwife, the plan at Treasury, according to one administration official, "was to build another bureaucracy, replicating itself, go dark for a year, and then unveil something small regarding a policy that it was sure it could win." Warren, obviously, has another approach in mind. And despite previous reports of tensions between Warren and both Geithner and Summers, a friend of hers says, "So far, it's been pretty drama free."

After her chat with the credit card CEO, Warren muses about the job ahead. No new consumer agency has been started up since the 1970s. The Wall Street reform bill does dictate much of the new agency's shape. (For instance, there must be divisions to deal with military families and senior citizens.) But there's no roadmap; the CFPB doesn't come with complete how-to-assemble instructions. "We're creating the first 21st century agency," Warren says. She doesn't want to form a new government entity that will "disappear into the faceless government void with regulations that don't make sense. Our political enemies have already said that. They assume that the agency will sit on the mountain top and roll down expensive, complicated regulations that won't help anyone." Instead, she's looking to build an agency that engages its consumers and finds a way to get its job down without generating unnecessary red tape and rules based on bureaucratic goobledy-gook.

Later, aides hustle Warren to a staff party in a conference room. Practically every employee of the bureau is present: 45 people. One staffer asks the gathered what they should dub this room and lists possible options: the Dodd-Frank Room (in honor of the two legislators who shepherded the legislation establishing the bureau), the Full Disclosure Room, the Accountability Room, or the Boomer Sooner Room. The last is a reference to the fight song of the University of Oklahoma. Warren, who grew up in Oklahoma, laughs and says, "It will quickly be abbreviated to the BS Room."

Warren then gets serious. She tell the staffers in the room, some who have been pulled into the bureau from Treasury, the Fed, and other government agencies, that the CFPB they are creating started from an idea—she doesn't have to point out that this idea was hers—and that this simple notion became an administration white paper that was turned into a statute. "In their whole lives," she says, "for people dedicated to public service, this is a journey they don't get to make." She vows they will together build the CFPB in "a different way."

Moments later, Warren is back in her barren office—one book shelf does hold three volumes: Rick Warren's The Purpose Driven Life, Andrew Ross Sorkin's Too Big To Fail, and a biography of Nelson Mandela—and she's talking again about what she doesn't want to do.

"The whole point here is to understand that the way government relates to people and people relate to government can be different in a wired world. The old model of doing agencies was that experts who were pretty much nameless and faceless and way, way distant collected information went though the rule-making process…[and] mostly handed things down from the agency. It's a model that works in a lot of contexts. But not here and not now." Her goal, she insists, is to create an agency that provides a model for transparency and citizen engagement.

Warren notes that political opposition to the agency remains. (During the legislative fight over the Wall Street reform legislation, business lobbyists tried to smother or emasculate the CFPB.) "There are those who would like to kill this agency," she says, adding, "if we make the ownership of this agency as clear as we can" and the "American people are invested in this agency" and "see it acting on their behalf," the bureau "will be able to withstand a lot of political and economic opposition."

Does she want to run it herself? After all, if the agency is supposed to be operating independently by next summer, it will need a chief soon. "It's just not today's question," she replies, saying she is working over 14 hours a day—"using every brain cell I've got, every erg of energy I've got"—to "stand this agency up." But, she adds, the head of the agency will have to ensure that "what happens to American families becomes woven into the agency" and that person must be willing to go on the offensive "to defend his agency against those who would want it to be less independent." That sounds a bit like Elizabeth Warren.

For now, when Warren discusses the CPFB's opening moves—such as pushing financial companies to simplify their agreements—she does talk in personal terms. She notes she is prepared "to be collaborative" in working with industry. She also says, "I'm prepared to be confrontational, if that's what's needed." No doubt, Warren—as a White House official and/or the first CFPB head—is also prepared to lend her populist, families-first, tough-on-the-Street cred to help Obama define the back half of his initial (and perhaps only) term. But is the president going to help her to help him?

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