Elizabeth Warren, the special White House adviser setting up the Bureau of Consumer Financial Protection, has selected Ohio Attorney General Richard Cordray to head the new agency’s enforcement arm, according to two people briefed on the appointment.

Cordray, a Democrat who was defeated in November for re- election by former Republican Senator Mike DeWine, has participated in the multi-state investigation of mortgage servicers over allegedly falsified documents.

Ever since the foreclosure crisis went nationwide and attorneys general from all 50 states have been treated by the press as a monolithic enformecment entity (probably partly because it’s intellectually gratifying to show off that you know it’s not “attorney generals”). It’s been fun for us to think of them as this pack of trained animals that one can unleash on the financial service industry, and apparently Elizabeth Warren feels the same way.

In the wake of the nations’s economic meltdown, financial literacy and financial consumer protections have taken on an urgency in the Obama White House. On Tuesday, Obama’s new Advisory Council on Financial Literacy was launched at a meeting chaired by Jonathan Rogers with fellow Chicagoans, White House senior advisor Valerie Jarrett and Public Engagement chief Tina Tchen at the table.

“There was a consensus that we work with younger people and get people exposed to all the issues around financial literacy at younger ages,” Rogers told me after the meeting at the Treasury Department. “Not only does it make them better investors and savers when they get older, but their parents and their aunts and their uncles can learn from the young people.”

First it was Republicans like Rep. Spencer Bachus (R-Ala.), the likely chair of the House financial services committee in the 112th Congress, who took aim at the new Consumer Financial Protection Bureau. Now, a high-ranking member of the Federal Reserve system, the agency that will eventually house the CFPB, is taking a cue from the US Chamber of Commerce’s playbook and trying to chip away at the bureau’s funding and clout.

On Monday, James Bullard, the president of the Fed’s St. Louis branch, questioned the amount of money coming out of the Fed’s budget to fund the new consumer bureau. Although housed within and funded by the Fed, the bureau, which is being launched by Harvard law professor and former bailout watchdog Elizabeth Warren, is an independent organization. It takes orders from no one but its presidentially-appointed chief. But the Fed’s Bullard said the bureau’s funding—about 10 percent of the Federal Reserve System’s spending in 2011, 11 percent the year after, and 12 percent in 2013—”is not based on any careful assessment of what the needs of the bureau will be as it attempts to fulfill the mandate of the Congress with regard to consumer protection.” He added, “I am concerned about this method of funding for the bureau.”

The CFPB will get the same scrutiny by Congress that any government agency would and should get.

Congressional Republicans are apparently intent on a big showdown with Elizabeth Warren, who is currently building up the new Consumer Financial Protection Bureau (CFPB).

This is very good news for the White House, if they use this opportunity wisely.

Some Republicans seem to think that Ms. Warren is about “big government” or “intrusive regulation”. But this is not the case – Elizabeth Warren’s approach is much more appealing and already popular with almost everyone on right and left: Transparency.

Look carefully at Ms. Warren’s September speech to the Financial Services Roundtable and think about how this plays as a broader political message.

“After today, regulators will no longer be able to ignore emerging threats to the economy,” said Sen. Chris Dodd, D-Conn., a sponsor of the bill, in a release. “And financial operators from the trillion-dollar derivatives market to small time payday lending will no longer be able to operate in the shadows.”

Payday lending is strongly regulated in 33 states and the Federal Trade Commission.

Moore: But you’ve left out an important word in this whole thing: oversight. And I think this might be the most important change that comes with having a Republican House is the Republicans basically having oversight over these agencies. They are rogue agencies. They act like independent fiefdoms over business. And that’ll be the real issue, is whether they’re willing to use–and one way you use oversight is through the power of the purse. You basically take money away from these agencies.

Gigot: So you deny them the funding to be able to implement the rules?

Moore: Yeah, the most obvious example is with ObamaCare. But you could do that with EPA, Interior Department. You could–the Republicans, if they wanted to, they could defund Elizabeth Warren. She has this new consumer finance agency.

Gigot: Financial bureau.

Moore: Right.

“I don’t think that major changes will take place on Dodd-Frank,” says Sen. Tim Johnson, D-S.D., who is expected to chair the Senate Banking Committee next year. “It’s a matter of minor changes taking place. There is not only resistance from the Senate, but the veto is possible, too. So we should focus on realistic solutions to our problems.”

His view was clearly not shared by top House Republicans, who pledged to have a go at Dodd-Frank as soon as possible. Rep. Scott Garrett, N.J., who hopes to chair the capital markets subcommittee, took a hard-line stance, calling on the administration to dismantle the new consumer bureau before it is even started.

“We don’t need a CFPB,” he says. “That would be a great first step for this administration if they want to start showing how they are willing to work with us, to say that, ‘We recognize the failure that this doesn’t do anything to address the problems, so let’s start unwinding that.’”

Madison said the consumer bureau probably would start by focusing on consumer banking products before adding in oversight of payday lenders and other financial firms not traditionally monitored by bank regulators.