Warren was an architect of the Consumer Financial Protection Bureau. Warren headed to Senate Banking

Elizabeth Warren is ready to further cement her position as a top Wall Street watchdog having all but officially secured a seat on the Senate Banking Committee.


But the finance industry insists it can make nice with its one-time nemesis.

It appears they’ll have no other choice: The Democratic caucus still has to finalize the committee makeup for the next Congress, but Warren’s official ascent to the Banking panel is expected to be only a formality.

Senate Democratic leaders have picked her to fill one of the panel’s open spots, a Democratic source with knowledge of the situation said Tuesday.

Upon taking a seat on the panel, the Democratic senator-elect from Massachusetts will immediately become one of the panel’s harshest critics of the financial industry, having campaigned as a populist champion who would crack down on big banks.

Warren was the architect of the Consumer Financial Protection Bureau, a key liberal priority in Wall Street reform but a major sticking point for Republicans and the banking industry. Warren appeared in line to be the bureau’s first director, having worked for a year to set it up, but her path to the post was blocked by Republican Senate opposition.

Warren — now with a Senate seat, a key committee perch and a loyal liberal following from her time on the campaign trail — appears well positioned to take on the industry she made her national reputation criticizing.

But industry leaders say they’re not bracing for battle, insisting that far from fearing Warren, they’re confident they’ll have a productive relationship with the new senator.

“I think the fear of her is overblown,” said Scott Talbott, the senior vice president for government affairs at the Financial Services Roundtable — a Washington-based lobby for large financial that is led by former Minnesota Republican Gov. Tim Pawlenty.

“I’m not worried about working with her,” Talbott said. “I’ve worked with her and her staff for a long time. So it’s a comfortable relationship, and there’s a lot of things we actually agree upon. And where we don’t agree, she keeps an open door.”

While Warren’s rhetoric on the campaign trail scorched Wall Street, she had a much more cordial relationship with the banking industry while she was setting up the consumer bureau for the Obama administration between July 2010 and August 2011.

“She’s earned her stripes,” said Richard Hunt, president of the Consumer Bankers Association. “She’s passionate about banking and consumers and so are we. We welcome the debate. I’d rather have her inside the tent than throwing grenades from afar.”

Industry officials are denying rumors, which percolated among liberals, that they lobbied Democratic leadership to keep Warren off the panel saying why would they waste their time trying to prevent the inevitable..



“The committee perch gives her a microphone, but she has a microphone anyway,” one industry official said. “Nobody I’ve heard of is taking any steps to use whatever little capital they have with Senate leadership to keep her off — nobody I’ve heard of.”

Despite promising they can work with Warren, banking officials were clearly hoping to avoid having to do so — the industry spent big in support of Massachusetts Republican incumbent Scott Brown

The finance, insurance and real estate industries pumped joint $6.4 million last cycle into Brown’s campaign — with slightly more than $5.6 million coming from individuals and the rest from Super PACs, according to Open Secrets.

And that support for Brown comes after he was the only Republican to vote for the 2010 Dodd-Frank Wall Street Reform law, clinching Democrats’ bid to pass a financial reform law that many in the finance industry had worked to defeat.

Warren appears to also be interested in mending fences. One industry source said she has been busy making phone calls to industry trade associations since her campaign victory in November.

For now, Wall Street, industry watchdogs and fellow lawmakers are all waiting to see which version of Warren show up in the Senate: the candidate who accused Wall Street CEOs of strutting around Capitol Hill with “no shame,” or the administration official who soberly emphasized the goal of regulation should simply be to ensure that mortgage and credit card products are easy for consumers to understand.

The groups that threw their weight behind Warren’s Senate campaign will demand she take a hard line against the banking industry and Republicans on some committee issues.

Consumer groups are expecting Warren’s help in upcoming battles over the CFPB. Republicans have balked at the consumer bureau’s structure, arguing the regulator should be dependent on Congress for its funding — an arrangement that would allow lawmakers more sway over its activities.

Tom Feltner of the Consumer Federation of America said he expected Republicans to continue their CFPB attacks next session and Warren would be critical in blocking them.

“Elizabeth Warren had a very important hand in both the creation of the CFPB and standing it up in its early stages,” Feltner said. “In 2013 we’ll be looking to hang on to what we’ve achieved, and she stands to be very influential in that.”

Even as they promise to play nice, some in the banking world are worried that Warren will use her perch to publicly vilify their industry — but they remain skeptical that she’ll be able to use her newfound star power to re-write the law on financial regulation.

“Obviously she’ll have to do some things politically to get some headlines,” one banking executive who asked to speak anonymously said. “But I think those things will be about optics. They will be a way to please her base, but will be more political than substantive and most likely will not go anywhere.”

Others say it’s too soon to tell how Warren will behave in the Senate.

"The politics of running for office and the politics of crafting legislation are not always the same," said one former Senate aide.

The former aide said that Warren's history suggested she would moderate her approach — if not her policy views — upon joining the Senate, noting that she had launched a "well-documented charm offensive" to shore up her relations with members of the financial industry when launching CFPB.

Next year there will be two open Democratic spots on the Banking Committee due to the retirements of Sens. Herb Kohl and Daniel Akaka. Sen. Chris Coons (D-Del.) had expressed interest in an opening but Sen. Joe Manchin (D-W.Va.) is Senate leadership’s pick to get the other open spot, according to a source familiar with the decision.

Manchin said Tuesday that leadership has not informed him of any decisions but that he would welcome a spot on the committee.

“Oh, I sure do. I sure do. I’d love to serve anywhere I can if I think I can help,” he said.

Kate Davidson and Manu Raju contributed.

This article first appeared on POLITICO Pro at 11:01 a.m. on December 4, 2012