The case of Elizabeth Warren vs. Mary Jo White exploded on Wall Street and Washington on Tuesday as the liberal Massachusetts senator sent a blistering 13-page letter to the SEC chair essentially calling her a bad regulator and a liar.
Defenders of White, a former federal prosecutor in Manhattan with a reputation for extreme toughness, castigated Warren for calling the SEC chair out on exactly what she told senators she would do during her confirmation process: Recuse herself from cases where her private sector law practice or that of her husband would cause a conflict of interest.
They also noted that one of Warren's other complaints—that White lied to her in a private meeting about the timing of a new rule on executive compensation disclosure—was unfair because the SEC is still pushing forward on the timetable White supplied to Warren, no matter what some other agency might say.
"It is rather extraordinary for a U.S. senator to send this kind of letter to one of our more distinguished public servants," Robert Kelner of the law firm Covington & Burling, an expert on political compliance, told me on Tuesday. "The allegation concerning recusal seems to me especially unfair because the Senate was very much on notice that under existing law Mary Jo White would have to recuse herself from a variety of matters."
Kelner added that "the criticism of agency inaction on corporate political disclosure also seems misplaced because corporate political disclosure has utterly nothing to do with the SEC. It's a beef that should be taken up with the Federal Election Commission."
The White House also came to White's defense, though perhaps in not the most robust fashion, which some Warren supporters said suggested the West Wing is not entirely thrilled with the SEC chair's tenure, either.
"The president does continue to believe that she is the right person for the job," press secretary Joshua Earnest said in something short of a full-throated endorsement.
The left mostly rallied around Warren, saying that the SEC under White has been a disappointment on both the rule-writing and enforcement fronts. Some activists told me privately that while they don't endorse all the specific criticisms in Warren's letter, they do agree with the broader critique.
And some said the biggest problem is that White often leaves the commission deadlocked between Democrats and Republicans because she recuses herself so often.
A former SEC official told me: "I don't often agree with Sen. Warren's views of the markets, but her view of the SEC's leadership under Chair White seems spot on. Despite an incredibly talented staff, the SEC has nothing to show for its last several years. Partisanship isn't to blame. It's leadership."
The official added that "the chair's autocratic style and refusal to compromise means that every issue is a fight—with battles at the staff and commission levels.
"The chair's initially splashy revisions to the 'no admit or deny' policy have proven to be a joke. Oh, and smart folks facing SEC action may have now figured out that they can deadlock the commission by hiring the chair's husband."
Beyond the specifics of the White-Warren dispute, the dustup speaks to the larger question of Warren's impact on the Democratic Party heading in the 2016 presidential election. Some say Warren's influence is waning given that she failed to stop President Barack Obama's push for trade promotion authority in the Senate and is having trouble lining up supporters for tougher laws on auto lenders.
But the letter shows that Warren still commands a big stage and is able to harness outrage at Wall Street—which continues to run hot as ever—in a way no one else can.
Her latest effort could both goose White to be tougher on rules and enforcement and further pressure Hillary Clinton to take a tougher stand against the banking industry in her presidential campaign. If she doesn't, Clinton risks losing enthusiasm and momentum on the left, especially with both Vermont Sen. Bernie Sanders and former Maryland Gov. Martin O'Malley making Wall Street-bashing centerpieces of their long-shot bids for the Democratic nomination.
And to a large extent, whether or not Warren wins each of the battles she enters is not the point. As long as she is playing offense and driving the conversation, the likelihood is that the trend will be toward tougher Wall Street regulation rather than rolling back of any laws already on the books. And that means she is winning even while losing.
—Ben White is Politico's chief economic correspondent and a CNBC contributor. He also authors the daily tip sheet Politico Morning Money [politico.com/morningmoney]. Follow him on Twitter @morningmoneyben.