WASHINGTON (CNNMoney.com) -- The new Consumer Financial Protection Bureau can't begin flexing its rule-writing muscle, cracking down on things such as tough-to-understand mortgages, until it gets a Senate-confirmed director.
But the Federal Reserve can.
Treasury has reached out to the Fed to discuss how the two can work together to help the bureau meet some of its tough rule-writing deadlines, people close to the situation told CNNMoney.com.
It's not clear, yet, if the Federal Reserve would actually write the rules for the consumer bureau. But agency officials are talking about it.
By leaning on the Fed, the bureau could meet its one-year deadline for issuing rules revamping mortgage disclosures, while effectively sidestepping critics who have questioned the bureau's rule-making authority because it lacks a confirmed director.
"We are coordinating fulfillment of certain rule-writing mandates under the Dodd-Frank Act with the Federal Reserve Board to speed clarity for the market and meet statutory deadlines," Deputy Treasury Secretary Neal Wolin said in a speech Monday in Washington.
The questions about the bureau's rule-writing authority arose after President Obama appointed Harvard University professor Elizabeth Warren as a special adviser to Treasury, the department tasked with setting up the new consumer bureau.
Warren came up with the original idea for the consumer bureau and had been viewed as a likely candidate to direct the bureau. She was also a controversial potential nominee, due to her tough and loud advocacy for consumers and anti-Wall Street rhetoric. Many lawmakers, including Sen. Christopher Dodd, a Connecticut Democrat, said they were unsure she could be confirmed.
Warren agreed to take the administration job so she could play a key role creating the bureau, which also helped the Obama administration avoid a lengthy confirmation battle.
The job has kept Warren busy. She has hired 50 staffers, and met with 14 bank chief executives, as well as lobbying groups, chambers of commerce, consumer advocates and investors.
"They were wary, but polite and quite surprised," Warren said Monday about meetings with the financial industry. "Some were sure I'd walk in with blood dripping from my fangs."
The consumer bureau has to work closely with the Federal Reserve over the next several months because it will take over the Fed's consumer protection rule-making powers, as well as some of the Fed's power to enforce consumer protection rules.
When the Consumer Financial Protection Bureau is up and running next July 21, it will be technically housed within the Federal Reserve system, even though it will act independently and won't report to the Fed.
It makes sense that bureau and Federal Reserve staffers would be working closely together on new rules during this interim period, said banking industry veterans.
American Bankers Association executive vice president Wayne Abernathy said that they hope a Fed partnership with the consumer bureau on rule writing could set a pattern for cooperation in the future.
And a Financial Services Rountable spokesman said their group also supports the Fed stepping up to help with rule writing.
"We believe that all the agencies should work together and should be united on these common goals," said Scott Talbott, senior vice president for government affairs for the Financial Services Roundtable.
Treasury has made no secret that it is working furiously on revamping mortgage disclosures. Warren has said her goal is to release a simple, one-page disclosure form that would allow consumers to understand the fine print and shop around for the best deal.
The Fed has already made some progress on mortgage disclosure forms, which includes consumer testing some sample forms and sharing the data with Treasury.
But if the deadline nears and the consumer bureau can't issue rules, could the Fed step in?
Staffers in both agencies are working on that, they confirmed.
Such a move could enrage Congress, where several Republican lawmakers are still fuming that Obama gave Warren such a key role.
In a Sept. 30 Senate Banking Committee hearing, Sen. Bob Corker, a Tennessee Republican, pressed Wolin about the consumer bureau's rule-making power without a confirmed director. And Wolin agreed it would be "tough" for the bureau to issue new rules without a director.
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