Panel to question controversial Biden nominee for top bank regulator

Sen. Pat Toomey (R-Pa.) is seen during a Senate Banking, Housing, and Urban Affairs Committee hearing to discuss oversight of the CARES Act within the Federal Reserve and Department of Treasury on Tuesday, September 28, 2021.
Greg Nash

President Biden’s pick to lead a top bank regulator will likely face a tough confirmation hearing in front of a Senate panel Thursday amid backlash about her views on banking, history as a scholar and her education in the Soviet Union. 

Cornell Law professor Saule Omarova was almost destined to be a controversial nominee to lead the Office of the Comptroller of the Currency (OCC) and ramp up oversight of U.S. banks. 

Omarova has criticized major banks for failing to serve their customers’ needs and has proposed a reimagination of consumer banking that would flow through the Federal Reserve, not private firms. 

While she’d be unable to make that happen on her own, Omarova’s proposal has stirred intense backlash from the industry and concern among some moderate Democrats about what she’d do with the OCC’s considerable power.

With universal opposition from Republicans almost certain, bank lobbyists have homed in on Senate Democrats most likely to break from party lines and sink Omarova’s nomination. Just one Democratic defection could derail Biden’s pick in the 50-50 Senate, and industry advocates have ramped up pressure for weeks ahead of her Thursday appearance before the Senate Banking Committee.

“We don’t expect any Republicans to vote for her regardless of what she says, and we believe she will have trouble getting all the Democratic votes on the Senate Banking Committee,” wrote Ian Katz, director at research consultancy Capital Alpha Partners, in an analysis.

“We expect an interesting and lively nomination hearing, but it would take extraordinary Democratic unity for her to get confirmed. It’s possible, but we don’t see it happening.”

While some progressive Democrats support offering consumer banking accounts through the Fed or U.S. Postal Service, the idea has little support beyond the left.

Moderate Democrats who’ve supported efforts to loosen banking regulations, such as Sens. Joe Manchin (W.Va.), Kyrsten Sinema (Ariz.) and Jon Tester (Mont.), have expressed concern about Omarova’s proposals.

In prepared testimony released Wednesday by the committee, Omarova said her primary focus at the OCC would be making sure community banks thrive in an industry increasingly dominated by big banks and technology firms. She stressed the importance of “preserving and fostering the relationship banking that drives economic growth and creates local jobs,” a goal shared widely among most lawmakers.

Even so, Omarova’s praise for community banks may do little to shield her from backlash from Republicans. GOP senators have blasted Biden for nominating someone they consider an avowed enemy of the banking industry to oversee it and have even reached into her youth in the Soviet Union as cause for concern.

Omarova grew up in the former Soviet republic of Kazakhstan and studied at Moscow State University on an academic scholarship named after Vladimir Lenin. Senate Republicans have blasted Omarova for refusing to submit her nearly 40-year-old thesis, written in Russian, on Karl Marx’s economic analysis, and have raised questions about her true values.

“In order for lawmakers to fully and fairly consider Professor Omarova’s nomination to serve as our nation’s top banking regulator, we need a complete picture of her policy positions. The fact that she recently deleted references to her thesis begs the question: what is she hiding?” said Sen. Pat Toomey (Pa.), the Banking panel’s ranking Republican, in a statement.

Omarova’s supporters say that while her scholarship as a law professor is fair game, papers written as a student under an oppressive, censorious Communist government are irrelevant to her qualifications. Both she and her allies have blasted Republicans for what they call a racist and McCarthyist smear campaign.

“There are a great many people by happenstance of their births who grew up in a context that’s a little different, and, historically, bringing that kind of perspective has been a hallmark of American democracy,” said Jesse Van Tol, president and CEO of the National Community Reinvestment Coalition, who endorsed Omarova’s nomination.

“This sort of race-baiting, red-baiting, whatever baiting you want to call it — I don’t think it has any place in the nomination process.”

Even Omarova’s critics in the banking industry have distanced themselves from Republican attacks on her early life in the Soviet Union, focusing instead on her recent advocacy for federal consumer bank accounts.

American Bankers Association President and CEO Rob Nichols, head of the largest U.S. banking trade group, praised Omarova’s “unquestionably impressive personal story and personal journey” in a speech to members last month.

“Our issues with Dr. Omarova have nothing to do with her impressive personal background, but rather with her very public support for ending banking as we know it,” Nichols said, noting his own mother’s emigration from the Soviet Union.

“We respectfully — but strenuously — disagree with those positions and believe they are out of step with the role for which she is being considered.”

Those who support Omarova point to her experience as an attorney with Davis Polk & Wardwell, a law firm with a prominent financial services practice, and as a special adviser to Federal Reserve board member Randal Quarles when he was former President George W. Bush’s Treasury under secretary for domestic finance as proof of her nonideological nature.

Van Tol compared Omarova to Sheila Bair, the Republican former chairwoman of the Federal Deposit Insurance Corp. who has called for stricter financial regulations and endorsed Sen. Elizabeth Warren’s (D-Mass.) 2020 presidential bid.

“If you look at the thrust of what she’s concerned about, it’s not putting more onus on the little guy or community banks,” he said. “It’s really much more fundamentally concerned with very large institutions, supervision of those institutions, and their risk-taking.”

Tags Elizabeth Warren Joe Biden Joe Manchin Jon Tester Kyrsten Sinema Pat Toomey

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