But that scenario turned out to be wrong, and underestimated Warren's own tenacity. It is now clear that the indefatigable Warren will be both a senior presidential adviser with direct access to Obama when she needs it, as well as a Treasury employee. In an administration dominated by Rubinistas, Warren will literally be the first financial progressive with both a personal connection to the president as well as an independent power base.
This strategy is a win-win, on several grounds. It gives Warren full authority to set up the agency, without having to run the gantlet of confirmation hearings and a likely Republican filibuster.
This way, Warren will be able to get the agency quickly up and running in a manner that serves both consumers and progressive politics. Early directives to bring greater simplicity and transparency to credit documents will be extremely popular. Politically, the carping by the banking industry and its Republican allies will remind the public which side the GOP is on.
This will take a lot of the wind out of the Republican claim that they opposed the bailout and share popular backlash against Wall Street. It will belatedly put the administration vividly on the side of regular Americans when it comes to banking issues.
And as Warren continues to be the remarkably popular champion of struggling families, it will become more difficult to deny her the job on a permanent basis if she wants it. And it will be more costly, even for a more Republican senate in the next Congress, to make her their nemesis.
Those like Sen. Chris Dodd who claimed Warren had little experience running things underestimated the lady. They certainly underestimated her as an astute political player. This appointment was delayed for several weeks because extensive discussions were necessary to produce terms that worked for both the White House and for Warren personally.
Credit for this victory is should be shared several ways. The progressive movement did not relent on this one. Denying Warren the job would have been a demoralizing slap at a Democratic activist base that was already in a state of near-despair.
It is hard to recall another case when a public pressure campaign for a particular nomination, with the tacit support of the would-be nominee, did not backfire. This success signals progressives to keep prodding Obama to be the leader we hoped we were electing.
Shahien Nasiripour in Huffington Post also gets credit for being the first one to suggest this interim tactic, back in July.
Credit also goes to President Obama himself. Despite nay-saying from the wing of his administration that is too cozy with Wall Street, the president is a good enough politician and has enough progressive instincts to recognize the Warren appointment as shrewd politics and smart on the merits.
But the most credit goes to Warren herself, for never pulling her punches either as head of the Congressional Oversight Panel or as a broader spokeswoman for financial reform. In an age of few progressive heroes, it took amazing combination of persistence, principle, political shrewdness and personal grace to make herself the indispensable woman.
Robert Kuttner is co-editor of The American Prospect and a senior fellow at Demos. His new book is "A Presidency in Peril."