Elizabeth Warren, Champion of Consumer Financial Protection

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The hearing then took a bizarre turn. McHenry called for a recess so members of the committee could go to the House floor for a vote. Warren replied that she had agreed to testify for an hour and could not stay any longer.

“Congressman, you are causing problems,” she said. “We had an agreement.” Offended, McHenry shot back: “You’re making this up, Ms. Warren. This is not the case.” Warren’s response, an outraged gasp, was played on cable news.

In a conversation a month later in his Capitol Hill office, McHenry is eager to emphasize that his problem is not with Warren, but with the bureau itself. That’s not to say he feels he has anything to apologize for. “I’ve asked questions of a litany of Administration officials from Democrat and Republican Administrations, and I’ve never seen an action by any witness like I saw that day,” he says.

Like most congressional Republicans—and a broad array of business groups, including the Chamber of Commerce, the Financial Services Roundtable, and the National Association of Federal Credit Unions—McHenry opposed the creation of the CFPB and voted against Dodd-Frank. At the time, the bureau’s opponents argued that its seemingly noble goals would not only hurt financial firms—depriving them of the ability to compensate for risky borrowers by charging higher interest rates—they would also hurt borrowers. The prospect of limits on the sort of rates and fees they could charge would cause banks and payday lenders alike to lend less and to not lend at all to marginal borrowers at a time when the economy needed as much credit as it could get.

Where it’s not actively harmful, McHenry argues, the bureau will be redundant. If there’s fraud or deceptive marketing in the consumer lending market, the federal government can prosecute it through the Federal Trade Commission. Clearer mortgage forms are all well and good, but Congress can take care of that, he says, noting that he introduced legislation for a simpler mortgage form three years ago. In response to arguments like these, Warren simply points to the record of those existing regulators: the Fed and the Housing & Urban Development Dept. have haggled over a simpler mortgage form for years. As for fears that the bureau will cap the interest rates companies can charge, she notes that Dodd-Frank explicitly prevents it from doing that.

Warren has been uncharacteristically tightlipped about her own ambitions. She refuses to say whether she even wants the job and has never publicly expressed a desire for it. In a way, the White House may do her a favor by not nominating her. If the President decides to go with a compromise candidate to appease Republicans, she will be spared the indignity of being tossed aside. She can’t be said to have lost a job she was never offered.

Yet Warren gives the distinct impression that she will not suffer long if the President passes her over. Harvard has more than its share of celebrity professors who have gone to Washington and returned. The experience could also lead to a different kind of life in politics: Democrats in Massachusetts have been urging her to come home to run for Senate against Republican Scott Brown. There would be books to write, television appearances to make, and, who knows, maybe a show of her own. And whatever happens, she will get to tell the second half of the story of how she started a government agency. Whether the story ends with her confirmation or being driven from town, it’s almost certain that the character of Elizabeth Warren will come out looking just fine.

With Carter Dougherty, Mike Dorning and Hans Nichols

Bennett is a staff writer for Bloomberg Businessweek.