WASHINGTON — Elizabeth Warren, then a Harvard Law professor, led the charge in 2010 to create a new government watchdog to protect consumers from Wall Street predation. A strong, independent agency was her first choice, she said at the time. “My second choice is no agency at all and plenty of blood and teeth left on the floor.”
Six years later, Warren and like-minded forces are girding for Round Two, as newly empowered Republicans prepare to kill or gut Warren’s most tangible government accomplishment: the Consumer Financial Protection Bureau. There’s a good chance blood and teeth will be shed before it’s all over.
“If they want to fight, it’s a fight they’ll get,” Warren said in an interview, promising a populist storm against Donald Trump’s White House.
And incoming Senate minority leader Chuck Schumer said Sunday that he has the votes to stop Trump and congressional opponents from repealing ‘‘the rules we put in place to limit Wall Street,’’ including the Dodd-Frank law.
‘‘We have 60 votes to block him,’’ the New York Democrat told NBC’s ‘‘Meet the Press.’’
Republicans and banking lobbyists are salivating at the prospect of gutting key parts of the 2010 Dodd-Frank law, the broad and complex response that passed Congress with almost no GOP support after the 2008 market meltdown.
No trophy is bigger in the hunt than dismantling, or at least severely maiming, the financial protection agency, which Warren conceived of in 2007 and built from scratch as an adviser charged with setting up the new bureau before she ran for the Senate.
“The CFPB is right in the crosshairs,” said Camden Fine, president of the Independent Community Bankers of America, an influential trade group representing small banks, which supports some changes to the agency being sought by Republicans.
The strong consumer watchdog, designed to police all corners of the financial industry for the sorts of lending abuses that contributed to the crisis, was one the elements of Dodd-Frank that Republicans most vigorously opposed in 2010.
Financial industry players have chafed at the aggressive tack taken by the agency, which has fielded more than 1 million consumer complaints and recently levied a $100 million fine on Wells Fargo for creating thousands of phony customer accounts. Critics say the bureau is overburdening lenders and crimping consumer choice.
“I’d like to take it out if we could,” said Senator Richard Shelby of Alabama
If Republicans can’t kill the bureau outright, Shelby said he would like to see its independent director replaced with a bipartisan board, and its funding —
“There’s no accountability now,” said Shelby, echoing the complaints coming from Wall Street and Main Street banks alike.
Putting a board of commissioners in charge and giving Congress control of its purse strings, advocates of the agency say, would ensnare the bureau in the kinds of political squabbles that have hobbled other regulators and undermine its ability to quickly and forcefully stomp out abuses.
Another way Trump could defang the agency is appointing a new director who is hostile to its mission, or at least friendlier to the financial industry. Whether Trump has the power to fire its current director, Richard Cordray, is a matter embroiled in litigation at the moment. Regardless, Cordray’s term expires in 2018.
Just two days after the election, Warren gave the agency’s staffers a pep talk during a visit — a trip that was scheduled before the election — and vowed to fight any assaults on the agency’s structure or funding, according to a person familiar with the meeting.
“The CFPB is one of the things in Washington actually working against Wall Street and for the American people,” Warren told the Globe in an interview, calling moves to kill or weaken her brainchild a “terrible mistake.’’
Defending the agency will fit Warren’s line of attack on Trump: that there’s already a growing chasm between the populist promises the New York real estate mogul made during the campaign and the early signals he is sending now.
She has repeatedly accused him of filling his transition team with lobbyists and corporate cronies that he told voters he would oppose if elected president. As Warren put it in a speech on the Senate floor Thursday, instead of “draining the swamp,” Trump is “inviting the biggest, ugliest swamp monsters in the front door.”
Warren and other Dodd-Frank supporters are not without leverage. As Schumer indicated Sunday, Senate Democrats hold enough seats to use a filibuster to block legislation that they find unpalatable.
But several financial executives and lobbyists say they’ve had conversations with Senate Democrats who are willing to support incremental Dodd-Frank changes that Republicans have eyed in recent years, including changes to the financial protection agency. If Republicans can peel off enough of them, Warren and her liberal allies won’t be able to block certain changes.
Former Massachusetts representative Barney Frank, a major architect of the law that bears his name, said he is “very concerned” about Dodd-Frank’s fate under the new administration. But he is far from hopeless.
“Trump’s got a problem because the music and the words are out of synch. The music is, ‘I’m going to help the little guy, I’m going to stand up to the big banks.’ The words basically are for the big banks,” said Frank.
Frank predicts it will get a lot harder when the GOP starts getting more specific about abolishing a bureau dedicated to fighting consumer abuses by credit cards and big banks, deregulating derivatives after they nearly caused the financial system to collapse, or letting banks make bad loans again.
“It becomes a harder sell. And I have great confidence in, for example, Elizabeth Warren to make that clear,” he said.
Trump made broad statements about wanting to kill or roll back the Wall Street overhaul law during the campaign, but provided no specifics. He did not share his views on the financial protection agency, though it’s no secret that he loathes Warren.
One warning sign for financial reform advocates: Representative Jeb Hensarling, a Republican from Texas who heads the House Financial Services Committee, has been bending Trump’s ear.
A close ally of Vice President-elect Mike Pence and an ardent critic of Dodd-Frank, Hensarling was at Trump Tower in New York Thursday, discussing his proposals to drastically revamp Dodd-Frank, which include targeting the financial protection agency.
“Obviously we talked about financial reform,” Hensarling, whose name has been floated as a possible Trump pick for treasury secretary, told the pool reporter, after the meeting. “Very excited to help drain the swamp, very excited to help get this economy working for working Americans again.”