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

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The Secret War
Though its outcome is uncertain, the Warren fight is only a subplot in a larger battle over last year's Dodd-Frank financial-regulatory-reform bill. Named for its chief Democratic sponsors, Representative Barney Frank and former Senator Chris Dodd, it was a complex beast of a law that tackled everything from CEO pay to bank-capital requirements to rules governing exotic financial instruments like derivatives. But the bill punted myriad details to federal regulators, asking them to hammer out no less than 385 new rules. A year later, that rulemaking is far behind schedule, owing in part to corporate lobbyists swarming regulators. "You're seeing efforts by many Republicans to slow-walk implementation," says former Treasury Department official Michael Barr.

The quiet, rearguard action against Dodd-Frank has raised the symbolic stakes of the fight over Warren. Obama has to draw the line somewhere, liberals argue. But thus far, the White House has offered an uncertain response to the GOP challenge. Some of Warren's backers think Obama's team has simply been kicking a hard problem down the road. "They have a lot of bad options," says one.

Compounding the problem is the Administration's internal divisions. Though Obama has long been an admirer of hers, Warren has never enjoyed enthusiastic support from other key figures, including Treasury Secretary Timothy Geithner, to whom Warren spoke bluntly in a 2009 hearing when she was the official watchdog of the TARP bailout program. ("People are angry," she told Geithner, because the Administration had not been tough enough with bailed-out bank chiefs.) And in a sign of how deep the influence of the big banks reaches, Obama's chief of staff, William Daley, has had to recuse himself from internal deliberations about Warren. Why? Because he's a former JPMorgan executive who reportedly opposed the consumer bureau's creation.

Obama has shown some signs of wanting a deal. The White House has approached several other candidates about the job — including former Michigan governor Jennifer Granholm and a top deputy of Warren's, Raj Date. That may suggest a hope that the GOP will be more amenable to a candidate other than Warren. But Warren's supporters doubt that Republicans will drop their insistence on changes to the consumer office regardless of who's tapped to run it. "It's time for President Obama to announce his intention to appoint Warren — whether Republicans like it or not," says Stephanie Taylor, co-founder of the Progressive Change Campaign Committee.

Taylor's group is urging Obama to take the provocative step of a recess appointment of Warren during one of the many weeks Congress will be away this summer. Presidents often employ the tactic of installing an appointee when Congress isn't around to block confirmation, but it's an inflammatory gambit. (And it comes with a downside: recess appointees can serve only until the end of the next session of Congress. In this case, Warren could serve only to the end of 2012.) But liberals say Republicans have left Obama no choice. "You've got to do a recess appointment," says Frank, who has called the GOP's position "the worst abuse of the confirmation process I've ever seen."

Yet some liberals fret that the White House will back down. After all, Obama has recently tried to mend fences with Big Business. The White House may also be hesitant to further antagonize Wall Street donors as Obama gears up for his 2012 re-election campaign. "I think he should appoint her and have the fight. Some things are worth fighting for," Maloney says. But when asked whether Obama is under pressure from potential corporate supporters, she replies, "You'll have to ask the President," then adds, "What do you think?"

In recent weeks, another option for Warren has emerged. Democrats are hunting for a strong candidate to throw against Republican Senator Scott Brown, winner of that stunning 2010 Massachusetts special election, who must defend the seat in November 2012. Some party officials have approached Warren about taking on Brown, and she hasn't ruled out the possibility. The scenario could provide the White House with a face-saving way of avoiding a fight over Warren. "The President is considering a number of candidates for the position of director, but no decisions have been made," says White House spokeswoman Amy Brundage.

Warren won't speculate about her own fate — in part, she insists, because she doesn't know what Obama will do. But she reiterates that the notion of her as an antibusiness bureaucratic tyrant is overblown. "Why is it that you can safely buy aspirin at the drugstore?" she asks. The answer: the Food and Drug Administration. The consumer bureau would play a similar role for financial products by ensuring their safety and reliability. Warren says that's good not just for consumers but for the whole economy. "Bad consumer financial products contributed to the greatest financial crisis since the Great Depression," she says. And ultimately, Warren says, no one in the government was truly responsible for the subsequent collapse. "By pulling all this together" in a financial-oversight office, "someone's going to be responsible," she says. "Someone's name is going to be on the dotted line." She hopes it will be hers. It remains to be seen whether President Obama agrees.

Clarification: In an interview, Warren did not explicitly say she wanted the job of director. Read more on this clarification here.

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