Elizabeth Warren has been appointed Assistant to the President and Special Advisor to the Secretary of the Treasury for the Bureau of Consumer Financial Protection (“CFPB”). In this role, Ms. Warren will be charged with establishing the CFPB, which was created by the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Act”) to regulate consumer financial products and services under the federal consumer financial laws. Ms. Warren is a Harvard Law School professor and is widely credited with originally proposing the creation of a consumer protection agency. Until the announcement of her appointment as special advisor, Ms. Warren chaired the Congressional Oversight Panel that oversees the Troubled Asset Relief Program.
Ms. Warren has long been rumored to be the top candidate for nomination as CFPB Director; however, concerns had been raised regarding the likelihood that she would be confirmed by the Senate. As an Assistant to the President and Special Advisor to the Secretary of the Treasury, however, Ms. Warren will not be formally confirmed by the Senate unless she is subsequently nominated to be the CFPB Director by the President. This is notable because Congress expressly determined that the CFPB should be isolated from political oversight as an autonomous bureau of the FRB headed by an independent Director. Ms. Warren will be directly accountable to both the President and the Treasury Secretary.
In the role of special advisor, Ms. Warren will not have all of the powers and responsibilities of the CFPB Director, including the rulemaking powers granted to the CFPB Director pursuant to Section 1022(b)(1) of the Act and the requirement to appear before Congress pursuant to Section 1016 of the Act. Ms. Warren will also be unable to assume the CFPB Director’s position as a member of the Financial Stability Oversight Council. Pursuant to section 1066 of the Act, the Treasury Secretary acts as the CFPB Director until a Director has been confirmed by the Senate. On the Act’s transfer date, July 21, 2011, the seat on the FDIC’s Board of Directors currently held by the Director of the OTS will be transferred to the CFPB Director pursuant to Section 336 of the Act; if a CFPB Director has not been confirmed by the Senate by that time the Treasury Secretary will assume that seat on the FDIC Board of Directors.
The Treasury also has set the “designated transfer date” to transfer functions to the CFPB as July 21, 2011. On this date, certain authorities will transfer from other federal agencies to the CFPB, and the CFPB will be able to exercise certain additional, new authorities under the Act and other laws. The Act’s new preemption standards for federally-chartered institutions also will take effect on the designated transfer date. The determination of the designated transfer date sets other deadlines, including setting the target date for publishing final rules that implement the Act’s mortgage reform provisions as January 21, 2013.