Nominees will be crucial in enactment of new Wall Street law

President Obama will have the opportunity over the next year to dramatically remake the leadership at the nation’s financial regulators.

The president’s appointments on bank regulation, insurance rules and consumer financial protection will have broad power to carry out the 2,300-page financial overhaul enacted by Obama last month.

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“Every president is going to appoint a lot of financial regulators, but not every president is going to appoint regulators with so much interpretative power because of the legislative changes,” said David Min, associate director for financial markets policy at the Center for American Progress.

Obama will likely move within the next year to name new heads of at least a half-dozen major offices, including: the Consumer Financial Protection Bureau; the Office of the Comptroller of the Currency; the Federal Deposit Insurance Corporation (FDIC); the Office of Financial Research; and an insurance representative on a new council of regulators.

The president is also in the process of filling vacant positions at the Federal Reserve. The Treasury secretary will also need to appoint someone to lead the first-ever Federal Insurance Office, which will have the power to monitor the insurance industry at the federal level.

Gil Schwartz, a former general counsel at the Federal Reserve, said there are an “extraordinary” number of regulatory openings due to the confluence of the financial regulation bill and normal staff vacancies.

“This is very, very far-reaching,” Schwartz said.

Most of the positions are subject to Senate confirmation, and Democrats and Republicans are already indicating that the battles ahead will be more contentious than previous debates on financial nominations.

In the middle of the financial debate in January, the Senate confirmed Ben Bernanke to his second term as Fed chairman, but with only 70 votes in support — the fewest in history for a chairman. Fed watchers and market analysts were fretting an even closer vote, which threatened to undermine confidence in the central bank’s ability to set monetary policy free of political meddling.

The Senate last week sent back to the president his nomination of Peter Diamond as a member of the Fed’s board of governors. The president is expected to re-nominate him.

The political battles ahead may also raise the stakes for the Obama administration to nominate new regulators before the next session of Congress, when the party is likely to hold fewer votes.

“There really is relatively little time,” said Bert Ely, a banking analyst. “We may see some nominations go up there this year that don’t get considered and next year won’t pass muster.”

The toughest battle will likely be waged over the new head of the consumer financial protection office, one of the centerpieces of the financial law and a hard-fought victory for Democrats and consumer advocates. The bureau has broad powers to write and enforce rules on home loans, credit cards and other financial products.

House and Senate Democrats are pushing Obama to nominate Elizabeth Warren, the Harvard professor and original champion of the consumer agency, as the office’s inaugural head. Rep. Carolyn Maloney (D-N.Y.) and House Financial Services Committee Chairman Barney Frank (D-Mass.) were circulating a letter last week seeking a meeting with the president to urge a Warren nomination.

Most Republicans have criticized Warren as someone who would overreach in the new job, while some Democrats, including Sen. Chris Dodd (Conn.), have raised questions about whether she could win the 60 votes necessary to overcome procedural hurdles. The office must begin operation within a year and will have an annual budget in excess of $400 million.

Liberals and some consumer advocates have also criticized John Dugan, the current head of the Office of the Comptroller of the Currency (OCC), for overriding state regulations that were sometimes tougher on bank lending practices. Dugan leaves office on Saturday, and the administration has named an acting comptroller.

Dugan’s replacement will need to oversee the consolidation of the OCC with the Office of Thrift Supervision, a merger required under the new law.

Sheila Bair is scheduled to serve out her term as chairwoman of the FDIC until June 23, 2011, even though she would remain as a member of the board of the FDIC until July 2013. Bair could be re-nominated as chairwoman, but she has said she wants to return to the private sector after her current term is finished.