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Questions On Warren's Role In Mortgage Talks Dominate Hearing

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   By Maya Jackson Randall 
   Of DOW JONES NEWSWIRES 
 

WASHINGTON -(Dow Jones)- White House adviser Elizabeth Warren is a lightning rod on Capitol Hill--even when she isn't in the room.

Warren wasn't at a hearing held Thursday by House Republicans to discuss efforts to address allegations that banks and other firms engaged in shoddy foreclosure practices. (Warren's next Capitol Hill appearance is set for next week.)

But several questions were about her.

At issue is Warren's role in mortgage-servicing settlement negotiations. While Warren has said she has only provided advice on efforts by state attorneys general to settle allegations that banks used shoddy foreclosure procedures, Republican lawmakers again disagreed with that characterization at Thursday's hearing, charging that Warren has played a leading role.

"The truth is the CFPB has been extremely involved," said Rep. Randy Neugebauer (R, Texas), referring to the Consumer Financial Protection Bureau, which Warren is setting up.

Problems with bank foreclosure processing became public last fall. Banks, state attorneys general and federal officials are working on a broad settlement of allegations of abuse. However, the consumer bureau doesn't gain authority over mortgage-servicing issues until it opens on July 21.

Rep. Patrick McHenry (R, N.C.), who accused Warren of downplaying her role in settlement negotiations during a hearing in May, argued again that Warren has been deeply involved in the settlement talks.

"This in-depth involvement" is "troubling," McHenry said.

Rep. Barney Frank (D, Mass.) vigorously defended Warren.

"This continued effort to demonize Elizabeth Warren because she's advised people...of what to do is, I think, bizarre," said Frank. "There is an obsession with Elizabeth Warren. It comes from people who never wanted this consumer protection bureau."

The questions about Warren's role illustrate the GOP's concerns about Warren and the consumer bureau, a new agency created by the Dodd-Frank financial overhaul that will have broad powers over the financial industry. Republicans and the financial industry fought the creation of the bureau during congressional debate last year. And this year, the GOP-led House has sought to slash the agency's budget, blunt the bureau's powers and overhaul the bureau's governance structure. Republican lawmakers have also criticized the president's decision to put Warren in charge of preparing the bureau for its launch without first giving the Senate a chance to vet her through the traditional Senate confirmation process.

Last month, GOP lawmakers asked the bureau to turn over all settlement-related documents and communications between Warren and any stakeholders after a conservative watchdog group, Judicial Watch, announced that it uncovered emails and other records showing that Warren has led meetings with state attorneys general on the foreclosure issue.

The Treasury Department released documents to lawmakers on Tuesday on the consumer bureau's behalf.

"The documents produced for Congress this week by the Treasury Department reflect inter-agency collaboration and advice," consumer bureau spokeswoman Jen Howard said in a statement. "The documents also reflect discussions with industry to better understand the servicing market the CFPB will oversee. But to be clear: The Department of Justice and other federal and state officials are currently conducting negotiations of the terms of a potential settlement with mortgage servicers. The CFPB is not."

Meanwhile, the White House hasn't nominated a director for the consumer bureau. Democrats and liberal groups have urged President Barack Obama to tap Warren for the job, but any nominee is likely to face a contentious battle in the Senate, making it unlikely the consumer bureau will have a director when it opens its doors.

While Warren wasn't at the hearing, Raj Date, an associate director at the consumer bureau, was a witness and faced questions about recommendations the bureau made to state and federal officials.

Rep. Sean Duffy (R., Wis.) criticized the agency for recommending that banks cut mortgage balances for troubled homeowners even though Congress had rebuffed such policies.

Duffy said Warren has been "less than forthright" during her testimony to Congress and defended his colleagues' scrutiny of the agency.

"Sunlight is the best disinfectant," said Duffy. "I think that's what has been happening here."

 

-By Maya Jackson Randall, Dow Jones Newswires; 202-862-6687, maya.jackson-randall@dowjones.com

--Alan Zibel contributed to this article.

 

(END) Dow Jones Newswires

July 07, 2011 13:50 ET (17:50 GMT)

Copyright (c) 2011 Dow Jones & Company, Inc.

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