House Republicans accused Elizabeth Warren of lying to Congress. | John Shinkle/POLITICO Warren unable to soothe Hill critics

In their latest attack on the newly created Consumer Finance Protection Bureau, House Republicans on Tuesday directed their aim at its chief architect, consumer advocate Elizabeth Warren, accusing her of lying to Congress and of drafting a “superclass of administrative elites” to run the agency she helped create.

At a contentious Oversight and Government Reform Committee meeting, Chairman Patrick McHenry sparred with Warren over the bureau, her role overseeing its launch as a member of the White House staff and even the amount of time she had agreed to testify.


McHenry’s assertion that she had lied was based on her last appearance before the panel in March, when he said she had not fully disclosed her role in providing advice to state officials negotiating a settlement with mortgage servicers that improperly foreclosed on homeowners.

Warren said she was simply providing information requested by Treasury Secretary Timothy Geithner. And when McHenry declared that the CFPB, under Warren’s direction, would hold unchecked power to regulate financial products like mortgages and credit cards, Warren shot back that such fears were “overblown” and more politics than fact.

“I have been told that if you say anything in Washington often enough, it is eventually treated as fact — regardless of whether it is true or false,” she said, reading from prepared remarks. “While making baseless claims might be shrewd tactics for those who want to undermine the bureau’s work, they are flatly wrong.”

The angry exchange between Warren, who is on leave from Harvard Law School to set up the agency, and McHenry reflects the broader war over the bureau, created when President Barack Obama signed the Dodd-Frank Wall Street reforms into law last year.

Even before the ink was dry on the bill, frustrated Republicans and deep-pocketed banking and finance interests have stated their intentions to neutralize the CFPB — or kill it outright.

Lacking the power to repeal the bill outright, or override a certain Obama veto, GOP lawmakers have adopted a two-pronged strategy: Use legislation to try to weaken the CFPB in the name of transparency and accountability — and undermine Warren, whom McHenry said Tuesday had a “blatant sense of entitlement” that was a symptom of “her disregard for congressional oversight.”

The House passed amendments pushing back the CFPB’s launch date to December, restricted its funding, maneuvered against appointing a director and made it more difficult for the bureau to adopt pro-consumer rules regulating loans, credit cards and mortgages. They also significantly diluted the bureau’s power, putting its strong-manager format under the authority of a five-member bipartisan commission.

The Senate has not followed suit. But GOP senators have made it clear that Warren — the odds-on favorite to run the bureau — would face a bruising confirmation fight if Obama nominated her, and in a letter sent to Obama, 44 of them warned they would not vote for anyone to lead the CFPB.

The Republican position is that so much authority should not be invested in one person but in a commission.

“My approach has been a commission as opposed to any one director,” said Rep. Spencer Bachus (R-Ala.), the financial services committee chairman. “The idea of a commission is the proper approach — it’s actually Elizabeth Warren’s proposal. She proposed in 2007 a financial product safety commission modeled on the Consumer Product Safety Commission.”

Democrats and the White House “want to really just give carte blanche power to the director of this agency, and they’ll do whatever she or he wants to do,” Bachus told POLITICO.

But Warren, the Obama administration and congressional Democrats contend that having lost the high-profile debate over the CFPB in the court of public opinion, Republicans are now trying to defeat it through a legislative process that rarely makes front-page headlines.

“The fight moved from Main Street to the dark alleys” of Washington, Warren said in a recent interview on “The Daily Show.” “So now the game is, ‘Let’s just see if we can stick a knife in the ribs of that agency.’

“Right now there are bills pending in Congress to delay the agency, to defund the agency, to defang the agency, make it toothless so it can’t get anything done — and bills in both the House and the Senate to kill the agency outright before it is ever able to take one step on behalf of middle-class families.”

Rep. Barney Frank (D-Mass.), the finance committee’s ranking member, said the GOP’s strategy smacks of desperation and a losing political hand.

“The Republicans clearly understand the fix they’re in,” Frank said, noting that the CFPB, and Warren, are very popular. Republicans’ attempts to pick it to death, he said, “is an implicit acknowledgement” that they’re on the wrong side of the issue, and their opposition to Warren may backfire: “They’ve done us a favor by making a recess appointment noncontroversial.”

Republicans and industry advocates insist they are in favor of consumer protection but that someone should watch the watchdog.

“We’re at a place where we think these are reasonable legislative changes,” said Jess Sharp, the U.S. Chamber of Commerce’s executive director for capital markets competitiveness. “We keep making the case that they are important changes. It doesn’t make sense to have all this power concentrated in one person” with very little accountability.

Though both sides deny it, the yearlong fight is as much about Warren, who became a minor celebrity and liberal darling while chairing the oversight panel appointed by Senate Majority Leader Harry Reid to oversee the Wall Street bailout, as it is about the agency itself.

For years, Warren has publicly crusaded against Wall Street and blasted financial industry practices as “rigged” against the poor and middle class, pointing to complex jargon-filled credit card agreements and payday loans that carry triple-digit interest rates. Banking lobbyists and their GOP allies complain that Warren has unfairly vilified their industry.

Liberals have campaigned for Obama to name Warren as the CFPB director, but the president acknowledged political reality and instead picked her to get the bureau up and running — a move which further tantalized the left and antagonized some lawmakers. Even some Democrats believe Warren’s outsize presence and media accessibility are hampering the agency’s launch.

Former Connecticut Sen. Chris Dodd, who with Frank wrote the bill that created the CFPB, recently told POLITICO that “it would be deeply unfortunate if the head of this agency is not filled because of ego [but] because of people who believe they are so important that their value exceeds the idea,” a clear reference to Warren. “It would essentially enable the opponents to kill the bill.”

The outspoken Warren also has a tortured history with Geithner, having clashed with him in her role as head of the panel overseeing the Wall Street bailout. Geithner has supported Warren in public, but there is little warmth between them or their respective staffs.

Critics within the administration charge that Warren has all but campaigned for a formal nomination or recess appointment and used press leaks to pressure the White House. Warren, however, has publicly declined to say if she wants the job or would accept an appointment, saying it’s the president’s decision to make.

Until Obama selects someone to run the bureau, it can’t begin its task of governing consumer finance, writing rules or monitoring businesses like payday lenders, which had not been subject to government oversight until now.

The Chamber’s Sharpe pointed out that his side advocates “the long view,” recognizing problems in the agency’s blueprint. Obama may get to choose the bureau’s first director, but a Democrat won’t always occupy the White House, which he argues makes a bipartisan commission more important.

In addition, “One of the arguments we’re making — and it’s a tougher argument to make when the bureau hasn’t been regulating — but if the bureau overregulates in the consumer space, it could blow back on consumers,” Sharpe said, by restricting choices or triggering higher fees.

But an administration official, speaking on background, said the Republicans’ proposals “are a delaying tactic” to help protect banks, not consumers. “These guys didn’t want an agency to begin with. … They’re trying to change it, in ways that are pretty subtle, that would cripple the agency from doing anything.”

Meredith Shiner and Ben White contributed to this report.