By Simon Johnson

The next big political battle in Washington – after the budget debate is declared “over” – will likely feature the Consumer Financial Protection Bureau, in particular the fight to determine whether Elizabeth Warren can become as the agency’s first official head.

But will this fight feature a classic left vs. right set-piece confirmation showdown in the Senate? Or it will it be resolved with cloaks and daggers closer to the White House – with Treasury Secretary Tim Geithner managing to prevent Professor Warren’s nomination?

There is much to commend the left vs. right scenario. The Republicans, after all, want to argue that regulation is excessive in general and regulation of financial products is somewhere between unnecessary and dangerous for economic growth in particular. This theme came up during the Dodd-Frank legislative debate on financial reform last year but it was largely lost in the larger conversation.

Now Spencer Bachus, Republican chair of the House Financial Services Committee, has Elizabeth Warren firmly in his sights – with the mortgage settlement negotiations as the flashpoint.

In a recent letter to Secretary Geithner, Mr. Bachus says,

“”In addition, reports about the role played by political appointees in the Treasury department — including those affiliated with the [CFPB], an agency that does not yet have any regulatory or enforcement authority — raise further questions about the [mortgage settlement] process.”

No matter that the CFPB only became involved when state law enforcement officials, in the form of attorney generals, asked for provide advice. Mr. Bachus is taking the opportunity to follow up on what he is reported to have said recently,

“In Washington, the view is that the banks are to be regulated, and my view is that Washington and the regulators are there to serve the banks.”

The industry is unhappy because the proposed settlement – or, you could say, their transgressions with regard to foreclosures — could cost them up to $20 billion.

Mr. Bachus would not have a direct voice in any nomination hearing, of course, but there are plenty of Republican Senators who are inclined to share his views – including Senator Richard Shelby, the ranking minority member of the Senate Banking Committee (and, like Mr. Bachus, from Alabama).

Ms. Warren actually represents a much more nuanced view – arguing that transparency and simplicity, from the perspective of customers, creates a more even playing field and is good for the industry. At least some community bankers seem to be on her side. She is also good at explaining this view and a confirmation hearing would be the perfect place for the country to witness and hopefully participate in this discussion. (Read her recent speech to the Credit Union National Association and make up your own mind.)

As Senator Sherrod Brown (D, OH), also a member of the Senate Banking Committee, pointedly framed the issues for the foreclosure debacle,

“No person or company is above the law. And that’s good for capitalism, it’s not anti-business, and it’s not a minor inconvenience that can be ignored in pursuit of bigger profits.”

But before you set aside time in the early summer for potentially gripping television from Capitol Hill, Ms. Warren has to get past Secretary Geithner.

If anything, Mr. Geithner at this stage is more pro-banking lobby than even Mr. Bachus. During the Dodd-Frank reform debate, Mr. Geithner would frequently argue that “capital, capital, capital” was all we really needed to fix the financial system.

Yet his team agreed to Basel III, which requires banks to have less equity funding than Lehman had the day before it failed. There is no sign that systemically important financial institutions will be required to have a significant extra capital buffer – although this is supposedly not yet decided. And despite the undecided capital standards and large evident problems still facing banks (the foreclosure fiasco, commercial real estate woes, continuing high unemployment), the Financial Stability Oversight Council – which Mr. Geithner chairs – is about to sign off on letting banks increase their dividends.

This makes no sense at all in terms of economic policy, but this is exactly what Mr. Geithner is presiding over. (If anyone you know at Treasury thinks this assessment is unfair, send them to Anat Admati’s webpage at Stanford.)

And having Elizabeth Warren on the scene – providing an alternative pro-consumer perspective – is apparently increasingly inconvenient to Mr. Geithner. For example, he has expressed displeasure at her engagement in the mortgage settlement process.

President Obama missed his best opportunity to reform the financial system when advisers – including Mr. Geithner – recommended that he defer to the top 13 bankers in March 2009. His team further punted when they failed to push for real change in spring and summer 2010, when the financial legislation was before the Senate. Mr. Geithner and his people were instrumental in defeating the Brown-Kaufman Amendment, which would have limited the size and the leverage (debt relative to equity) of the largest banks in the United States.

Will Mr. Geithner go for the trifecta? He was instrumental in bailing out the big banks without any strings. He held back serious attempts at legislative reform. Will he now prevent Elizabeth Warren, our potentially most effective modern regulator, from even coming up for a vote in the Senate?

An edited version of this post appeared this morning on the NYT.com’s Economix blog; it is used here with permission. If you would like to reproduce the entire post, please contact the New York Times.