Wall Street critic Elizabeth Warren named consumer watchdog

President Barack Obama named Wall Street critic Elizabeth Warren as his new consumer financial czar on Friday, drawing praise from liberals and an outcry from Republican opponents and the financial industry.

Warren, a Harvard law professor and outspoken consumer advocate, will set up a powerful new consumer financial protection agency under a sweeping regulatory overhaul enacted in July.

"The Consumer Financial Protection Bureau will be a watchdog for the American consumer," Obama said in the White House Rose Garden with Warren standing at his side.

Obama announced Warren not as head of the new agency but as special adviser to oversee its establishment, allowing him to avoid a bitter Senate confirmation fight. Republicans accused him of circumventing congressional oversight.

With congressional elections looming in November, the White House hopes Warren's appointment will have populist appeal to  voters resentful of Wall Street excesses that are seen as a root cause of the financial crisis that drove the United States into its sharpest downturn since the Great Depression.

But the financial industry and many Republicans opposed Warren's selection, worried that she will bring a heavy-handed regulatory approach that could hurt business profits and global competitiveness.

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

Warren, whose grandmother drove a wagon in the Oklahoma land rush, said in a White House blog post that the new agency would act as a "tough cop on the beat" and declared that the time for financial "tricks and traps" was over.

Warren becomes assistant to the president and special adviser to Treasury Secretary Timothy Geithner, and Obama said she would have direct access to him and would play a key role in selecting the director of the agency.

Warren's supporters hailed her appointment.

"I would like to congratulate American consumers, because nothing could be better news for them in terms of being protected in financial matters like home mortgages, bank accounts, and credit cards," said Representative Barney Frank, chairman of the House Financial Services Committee and a Democrat.

Warren's critics saw her appointment differently.

"The Obama administration's first priority should be ensuring that our financial institutions are operated in a safe and sound manner," Republican Congressman Spencer Bachus said. "Instead they resort to a calculated political ploy to appoint a passionate, but inexperienced, advocate to run a new agency with unprecedented power."

Matt McCormick, a portfolio manager and banking analyst with Bahl & Gaynork, called Warren''s appointment a "thumb in the eye to people trying to address real issues."

"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."