When wondering what will happen in policy in the near term, I don’t think it’s possible to go wrong betting on what Wall Street thinks. And they think Elizabeth Warren will be nominated to head the Consumer Financial Protection Bureau, according to Rupert Murdoch’s New York Post:

Wall Street is preparing for a hurricane starting with the letter E, but it’s not Earl, it’s Elizabeth, as in Warren.

Bankers appear to be resigning themselves to a fate worse than tougher financial regulation: The hard-charging Harvard professor, who oversees TARP funding, seems a near-cinch to be named the nation’s consumer watchdog.

“At this point, it seems pretty clear that she’s going to get the nomination,” said one high-ranking bank official, noting that President Obama, who has been sliding in the polls, could use a Warren nomination as a rallying point.

In the article, sources raise the possibility of a recess appointment in the month before the election, an “October Surprise” of sorts to goose the base. The writer doesn’t seem to know that Treasury, not the President, could make her acting director immediately without Senate action. It also speculates that Michael Barr, seen as Warren’s chief competition for the CFPB post, would more likely take over the Office of the Comptroller of the Currency, from which bank lobbyist John Dugan will step down.

Warren and Barr at the two key consumer posts (OCC can invoke pre-emption of state consumer protection laws and has a seat on the systemic risk council) would certainly be a significant upgrade over a bank lobbyist and nobody.

I suppose you can devise some double- and triple-cross, where the Post has an agenda to reverse the Warren boomlet, and are printing this to rouse the opposition, or that banksters are saying this to deflate the base when it doesn’t happen, or something. But I’ve been cautiously optimistic about this because of the political ramifications, and with the midterms looking grim, frankly the White House needs something like a Warren appointment – not just a nomination – to bring some measure of cheer to the base. That doesn’t mean this will absolutely happen. But it’s notable that the banks seem to be mentally preparing themselves for that reality.