In Washington, a heated debate is raging over President Biden’s choice to lead a typically low-profile agency that regulates the banking industry.
Saule Omarova, 55, was nominated to be the nation’s next comptroller of the currency in September. If confirmed, she would be the agency’s first female and minority leader in its 158-year history. However, her nomination has been met with fierce opposition from Republicans and the banking industry, with the criticism at times echoing the Red Scare that afflicted the United States following World War II.
The Office of the Comptroller of the Currency is one of several federal agencies that oversee various aspects of the financial system. It is in charge of roughly two-thirds of the country’s banking system. Because of Omarova’s previous criticism of the banking industry, banks are concerned that she will be a tough regulator for Wall Street. They are also concerned because of academic writings in which she has proposed major changes to how banks operate in the United States.
Some Republicans and their conservative media allies have gone even further, implying that because she was born in the former Soviet Union, she favors a government takeover of the banking industry. Omarova and her supporters claim that her critics have unfairly mischaracterized her academic work and, at worst, are waging a smear campaign against a long-respected expert in financial regulation.
As part of her nomination, Omarova will appear before the Senate Banking Committee on Thursday.
Omarova was born in Kazakhstan during the Soviet era and immigrated to the United States in 1991. She has primarily worked as a lawyer and, for the past several years, as a law professor at Cornell University. She has testified as an expert witness on financial regulation numerous times over the years. She briefly served in President George W. Bush’s administration.
Republicans who oppose Omarova point to her previous writings and public comments as the source of their concerns. She published a paper last year arguing for a banking system overhaul that would expand the Federal Reserve’s role by allowing the central bank to hold consumer deposits. Proponents of such a move argue that the Fed would be able to extend credit to individual accounts more quickly during economic downturns. Following the Great Recession, banks hoarded deposits and lent little to repair their balance sheets.
On the surface, such a proposal would deprive banks of one of their most important sources of lending funds.
Omarova claims that the paper’s goal was to be ambitious and broad-reaching, ignoring current political realities. It was written during the COVID-19 pandemic, she said, when trillions of dollars in government aid was being distributed to Americans as a result of the pandemic’s financial consequences. Her proposals, she claims, necessitate a congressional act.
Senator Pat Toomey of Pennsylvania, the ranking Republican on the Senate Banking Committee, has said Omarova’s previous academic work disqualifies her from overseeing the OCC, calling her proposals too radical. But his skepticism of Omarova’s professional credentials has spilled over into his personal life. Toomey requested a copy of a graduation paper she wrote about Karl Marx “in the original Russian” when she was an undergraduate at Moscow State University in a letter to Omarova after she was nominated.
The banking industry has been unusually vocal in its opposition to Omarova’s nomination, primarily based on her views on financial regulation.
The Office of the Comptroller of the Currency is primarily in charge of supervising mid-size to large banks with operations in multiple states. The OCC is frequently called in when banks are accused of wrongdoing or of endangering the financial system’s safety and soundness. For example, the OCC was heavily involved in the Wells Fargo investigation after it was discovered that the bank’s employees had opened millions of bogus savings and checking accounts for customers.
Omarova maintains strong support from both the White House and the majority of Senate Democrats. With Republicans almost certain to unite in opposition, her confirmation will be decided by a handful of moderate Democrats, including Montana’s Jon Tester, Arizona’s Kyrsten Sinema, and West Virginia’s Joe Manchin.