Elizabethan Drama

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Photograph by Michele Asselin / Contour / Getty Images for TIME

Warren is hoping to run the watchdog bureau she helped create

Clarification Appended: June 30, 2011

Here's some good news for consumers who feel themselves trampled by soulless banking and credit giants: on July 21, a new consumer-protection agency will open its doors in Washington, with the mission of making everything from mortgage documents to credit statements fairer and easier to understand and generally giving the little guy more power against the financial corporate juggernauts.

Here's the bad news: it's not clear that President Obama will be able to appoint anyone to run it.

It's an unexpected twist to a larger Obama policy achievement that has been slowly unraveling in recent months. Last July, Obama signed a sweeping bill, passed by the Democratic Congress, that overhauled Washington's regulation of Wall Street banks and other financial-services companies whose greed and risk taking helped wreck the U.S. economy. The idea was to prevent another financial crisis through tighter rules and closer supervision. A year later, Obama is fighting off emboldened Republicans who — backed by Wall Street money and lobbyists — are trying to gut the measure. The battle is raging mostly out of public view, in the realm of regulators and budgetmakers.

But a more visible showdown is unfolding over what some advocates say is the best feature of the Wall Street reform bill: a new Consumer Financial Protection Bureau created to safeguard ordinary Americans from confusing, sneaky and downright dishonest tactics by the likes of banks, mortgage lenders and credit-card companies. Obama has hailed the office as "a new consumer watchdog with just one job: looking out for people — not big banks, not lenders, not investment houses ... as they interact with the financial system."

Now the fate of that watchdog is in doubt. At the center of the fight is Elizabeth Warren, a strong-willed Harvard Law professor who has become the most celebrated consumer advocate since Ralph Nader. Warren's supporters — and there are many, especially on the activist left — argue that she's the obvious choice to run the new bureau. In part that's because it's her brainchild: it was Warren who asked in a 2007 essay why consumers were protected from buying appliances with unseen faulty wiring that could burn down their homes but not from hidden terms, fees and risks that could sink their finances. Obama picked up her idea for a consumer-protection bureau and campaigned on it in 2008, even before the financial crisis gave the concept some urgency.

But Obama has yet to appoint Warren to the top job, and Republicans have long made clear that they will oppose Warren's appointment if he does. In May, they upped their ante. In a letter to Obama, 44 Senate Republicans — enough to filibuster any Senate action — declared that they would oppose any nominee to run the bureau unless Obama agreed to changes in its structure and funding. Democrats say those changes would effectively neuter the bureau and hand the financial industry yet another victory over the little guy.

That leaves Obama with three options, none of them appealing. He can muscle Warren into a short-term recess appointment this summer, an act sure to enrage Republicans and prevent Warren from serving a full term. He can officially nominate her, or someone else, and hope a public-relations effort will force the GOP to capitulate. Or he can try to cut a deal to sacrifice Warren but save her agency, which would surely disappoint his already restive liberal supporters. (One progressive group has warned that such a deal would show "complete and utter weakness.") At the moment, no one is sure what he'll do. Including Warren.

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