WASHINGTON (Reuters) - From an exclusive perch close to the seat of power, Wall Street nemesis Elizabeth Warren will have plenty of autonomy as well as President Barack Obama’s ear.

Elizabeth Warren briefs reporters on the latest news of her agency, which oversees the government's disbursement of billions of dollars to U.S. banks and the auto industry by the Troubled Assets Relief Program, at the Reuters Financial Regulation Summit in Washington April 27, 2009. REUTERS/Mike Theiler

The Harvard law professor, whose grandmother drove a wagon in the Oklahoma land rush, is a folk hero for consumer groups and the bane of Wall Street. She will build from scratch a new government agency to crack down on abusive practices in financial products like mortgages and credit cards.

Warren has known Obama since his student days at Harvard and will be designated “assistant to the president” -- a coveted title most often reserved for the closest White House aides.

Named on Friday as a special adviser leading the creation of the Consumer Financial Protection Bureau, she will juggle reporting to two of the most powerful figures in Washington -- Obama and Treasury Secretary Timothy Geithner.

Warren’s relationship with Geithner has occasionally been a bit rocky, although both now say they get along just fine. The folksy, plainspoken Midwesterner and the smart, New York-born financial guru clashed when Warren ran the U.S. government watchdog agency overseeing the $700 billion financial bailout program.

Both Warren and Geithner appeared with Obama at the Rose Garden announcement of her new job, but neither spoke.

The advisory role allows Obama to avoid a nasty battle for Warren’s Senate confirmation that would have been triggered by a formal nomination as director of the consumer agency but would put her at the helm of an independent agency.

“This is a capitulation of sorts,” said Terry O’Neill, president of the National Organization for Women. But she said she believed Warren would ultimately wield influence in the “old boys’ club” that is the administration’s economic team.

SPLITTING THE BABY

Warren will work from two offices -- one at Treasury and another in a building a few blocks from the White House where the consumer agency will initially be housed. Most assistants to the president have space in the West Wing and power is often measured by their physical proximity to the Oval Office.

The White House feared Warren would have been sidelined during a lengthy nomination fight in which she would have been expected to keep a low profile and would have been much more constrained in the duties she could take up.

Wall Street fears Warren would use her role to push for policies that would hurt profits on products like credit cards and stifle their competitiveness.

Obama’s Solomon-like decision to split the baby raised questions about whether it was a half measure that would limit Warren’s power as she works to get the bureau up and running.

“If Warren is given real power, this is great news,” said Becky Bond of the liberal group CREDO. “If she is not given the power to make change and hold Wall Street and abusive banks accountable, this maneuver is nothing more than inside-the-Beltway cleverness.”

Business groups and some senators considered the bypass of the confirmation process as signaling a lack of transparency that would undermine the new consumer agency.

It was Warren who first proposed the consumer agency and helped the administration push for its inclusion in the sweeping financial reform bill that passed in July.

Warren, 61, has spent decades championing the rights of middle-class families and detailed their struggles in a best-selling book called “The Two-Income Trap.”

The janitor’s daughter from Oklahoma, whose father was a victim of a crooked business partner, has been called by Obama a “dear friend,” and her views on issues like predatory lending have long gelled with his.

REAL AUTHORITY?

Few who know Warren doubt she would have insisted on a position with real authority.

“My working assumption is that Elizabeth Warren, having known her for many, many years, would not accept a position where she does not have the authority she needs to make things happen,” said Maureen Thompson of the consumer group Americans for Financial Reform.

“She is not a shrinking violet,” Thompson said.

Warren’s job has been compared to previous advisory roles, such as the “pay czar” job held by Kenneth Feinberg to examine executive compensation at bailed-out banks and Steve Rattner’s appointment as “car czar” leading the auto industry rescue.

A provision in the financial reform law that directs the Treasury Department to get the consumer agency up and running allowed Obama to name Warren to the advisory role.

Warren will be “instrumental” in picking the consumer agency’s director, White House spokesman Robert Gibbs said, but he would not say if she would be considered as a candidate.

Obama’s decision sparked a debate among banking lawyers over potential legal constraints on Warren’s authority.

Some said the law limits Treasury’s role to overseeing the integration of employees from various federal agencies into the new shop and would not include the ability to write new regulations. Others say that is too limited an interpretation.

Former Bush administration official Tony Fratto said it would have been virtually impossible to confirm Warren ahead of the November congressional elections and even harder to do so afterward, with Republicans likely to make gains in the Senate.

But White House officials rejected any notion that Obama blinked from a fight.

“A confirmation battle could be 7, 8, 10, 12 months long,” one senior official said. “In that period of time, she wouldn’t only have no power to do anything, she wouldn’t have any role in the decision-making in standing up the agency. She wouldn’t be able to speak publicly about the agency.”

“This is a far better option because she will play a central role in getting the agency going at a pivotal time,” the official said.