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.
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 (CFPB), she will juggle reporting to two of the most powerful figures in Washington -- Obama and Treasury Secretary Timothy Geithner.
Obama called Warren "one of the country's fiercest advocates for the middle class."
"It only makes sense that she should be the architect working with Treasury Secretary Geithner in overseeing all aspects of the bureau's creation," the president said in the White House Rose Garden on Friday, when he announced Warren's new role.
Warren's relationship with Geither has occasionally been a bit rocky, although both now claim 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.
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 could give her more clout in the White House.
The White House Friday declined to say whether Warren would be a candidate to lead the agency. "She is focused on setting this up," spokesman Robert Gibbs said.
"This is a capitulation of sorts," said Terry O'Neill, president of the National Organization for Women. But O'Neill said she believed Warren would ultimately wield influence in the "old boys' club" that is the administration's economic team.
Republicans were swift in their criticism. "President Obama just gave his personal friend an open-ended, unilateral appointment to head up a brand new bureaucracy with sweeping powers to restrict Americans' financial options," said Rep. Tom Price of Georgia, the chairman of the Republican Study Committee.
The GOP also sent a letter to White House Counsel Robert Bauer in which they challenged Warren's working arrangement.
"In making this appointment, the President bypassed the Senate confirmation process. Furthermore, by giving Professor Warren responsibilities at both the White House and the Treasury Department, he is undermining Congressional oversight while giving her substantive authority over the CFPB," said the letter from House Committee on Oversight and Government Reform Ranking Member Darrell Issa, R-Calif., and the Ranking Member of the Financial Services Committee Spencer Bachus, R-Ala.
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.
Yet 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 now been called by Obama a "dear friend," and her views on issues like predatory lending have long gelled with his.
Given Warren's force of personality and her closeness to the president as well as top White House advisers David Axelrod and Valerie Jarrett, few doubt that 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 likened to some previous advisory positions Obama has created within treasury, such as the "pay czar" job held by Kenneth Feinberg to examine executive compensation at financial firms bailed out by the government and Steve Rattner's appointment as "car czar" to oversee the U.S. 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.
Some of her supporters believe she may eventually be nominated to become the agency's director.
The decision sparked a debate among banking lawyers about whether there are legal constraints on Warren's authority.
Some said that under the law Treasury's role may be limited to overseeing the integration of employees from various different federal agencies into the new shop and would not include the ability to write new regulations, for example.
Others say that is too limited an interpretation of the law.
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 they 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.
