Warren vows end to "tricks" with consumer agency

WASHINGTON (Reuters) - Wall Street critic Elizabeth Warren said on Friday she accepted the job of setting up a consumer financial protection agency for President Barack Obama and declared that the time for financial "tricks and traps" was over.

Obama was expected to announce his appointment of Warren, a Harvard University professor and hero to liberal activists, at 1:30 p.m. EDT, taking a step toward enacting the financial reform that is a signature achievement of his presidency.

The Consumer Financial Protection Bureau, which is Warren's brainchild, will have broad powers to write and enforce regulations covering mortgages, credit cards and other financial products.

Although expected, her appointment worried Wall Street, where she is reviled by many for her calls to crack down on abusive lending practices by financial firms.

"It's a thumb in the eye to people trying to address real issues," said Matt McCormick, a portfolio manager and banking analyst with Bahl & Gaynor.

"It is obviously more political than focused on correcting ills of what happened in the financial industry. I really doubt she will have the ability to bring people together considering the political nature of her appointment. It is troubling."

Warren will not be in charge of directing the agency once it is formally set up. By selecting her as an adviser rather than as the agency head, Obama sidestepped the congressional confirmation process, which Republicans could have used to thwart Warren's nomination.

"Clearly putting her in this role cements her imprint on the agency, whether she ultimately leads it or not. It also implies there's going to be a transfer of power from the other regulators sooner rather than later. I think it would be better, though, for the agency to have a Senate-confirmed agency head, if that's even possible," said Ed Mills, an analyst with FBR Capital Markets.

'TOUGH COP'

Warren said in a blog post on the White House website that she had "enthusiastically agreed" to take on the role.

"The president and I are committed to the same vision on CFPB and I am confident that I will have the tools I need to get the job done," she said.

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

The White House hopes Warren's appointment will energize supporters from the president's liberal base before November 2 elections that are expected to produce victories and possibly congressional majorities for Republicans.

She will become assistant to the president and special advisor to Treasury Secretary Timothy Geithner.

"Warren will play the lead role in setting up the bureau and ensuring it is as effective as possible," a White House official said. "(She) will also advise the president on policies and programs that are designed to protect the financial interests of middle-class families."

ENLARGING THE FINE PRINT

Obama, a Democrat, will use the announcement to draw attention to financial regulatory reform -- legislation that Republicans largely opposed and voters largely ignored as they fret over a rough economy and near double-digit unemployment.

"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," Obama was to say, according to excerpts of his remarks released in advance.

"Basically, the Consumer Financial Protection Bureau will be a watchdog for the American consumer, charged with enforcing the toughest financial protections in history."

Obama has made improving the lives of the middle class a central theme of his efforts to support Democratic candidates, drawing contrasts with Republicans, who he says favor the rich when it comes to financial and tax policies.

Enacting the broad financial reform law -- including the establishment of the consumer agency -- is part of the strategy, which he hopes will resonate with Americans.

"If the CFPB can succeed at leveling the playing field, we can go a long way toward repairing a gaping hole in the budgets of millions of families," Warren said in the blog.

"But nobody has ever thought or argued that the consumer bureau can fix everything. Lost jobs, stagnant incomes, rising costs for college, dwindling retirement savings -- there's a lot of work to be done."

It is unclear how long Warren will stay in her job establishing the agency. Treasury, which is setting the bureau up, must lay out a timetable soon for how long that will take.

(Writing by Jeff Mason and Patricia Zengerle; additional reporting by Caren Bohan and Ross Colvin in Washington, Steve Eder in New York and Joe Rauch in Charlotte; Editing by Stacey Joyce)