Finance

Failed watchdog nomination angers progressives

President Biden’s failed nomination of a top bank watchdog has left progressives furious and consumer advocates concerned about the future of a key agency. 

Biden is on track to finish the first year of his term without a full-time leader of the Office of the Comptroller of the Currency (OCC), an independent agency with broad power over national banks.

Saule Omarova, whom Biden nominated as comptroller of the currency in September, withdrew from consideration last week shortly after a brutal Senate confirmation hearing. The Cornell law professor bowed out after enduring weeks of attacks on her roots in the former Soviet Union from Republican lawmakers, but also after several Democratic senators raised concerns about her policy views.

Omarova was broadly supported by liberal lawmakers and a wide range of groups who’ve long called for a culture change at the OCC. But while her supporters said she had deep qualifications and an expert grasp of banking law, they acknowledged she faced slim odds of confirmation in an evenly divided Senate.

“I don’t think it was a winnable fight,” said Jesse Van Tol, president and CEO of the National Community Reinvestment Coalition, a nonprofit that advocates for measures to end lending discrimination and increase financial access in neglected communities. 

Omarova was considered a long shot to be confirmed from the moment Biden nominated her. 

In several legal papers, she proposed a sweeping reimagination of the banking system, shifting consumer accounts away from megabanks and toward partnerships between the Federal Reserve and community banks.

Some progressive lawmakers and policymakers support federal consumer bank accounts, but the idea is a non-starter with more moderate Democrats and Republicans. Omarova also evoked intense opposition from the powerful bank lobby, which fought aggressively to tank her nomination.

The Independent Community Bankers of America also took the unusual step of publicly opposing Omarova in a letter to senators, arguing she “has advocated the displacement of community banks with government credit allocation.” The industry group declined to comment for this story.

“Once the community banks came out so strongly against her, I think most people thought then that it was uphill,” said Michael Calhoun, president of the Center for Responsible Lending.

Omarova’s criticism of the 2018 bipartisan Dodd-Frank rollback bill also made her a tough sell to Democratic Sens. Mark Warner (Va.) and Jon Tester (Mont.), two leading sponsors of that measure and members of the Senate Banking Committee. Both expressed concerns about Omarova’s nomination during her hearing before the Banking panel last month. 

While Omarova’s supporters acknowledged her nomination was risky, many condemned Democratic senators and even the White House for failing to defend the nominee from vicious attacks on both her views and national origin.

Omarova was born in the former Soviet republic of Kazakhstan and was raised by family members who escaped Joseph Stalin’s purges of ethnic minorities. After studying in Moscow as an undergraduate, Omarova emigrated to the U.S., became an American citizen and worked at a prominent New York law firm before joining the Treasury Department under George W. Bush.

Even so, Omarova faced constant attacks on her origin from Republican lawmakers, some of whom called her “comrade” or “communist.”

“Corporate interests and their allies in Congress waged a relentless smear campaign against her to block the nomination of a highly qualified candidate who was committed to making the economy work for all Americans,” said Sen. Sherrod Brown (D-Ohio), chairman of the Senate Banking Committee, in a statement to The Hill.

“I am disappointed that the attacks against her character and misrepresentations of her views were not resoundingly rejected in a bipartisan manner.”

Van Tol also said the White House did not proactively frame Omarova’s proposals before Republicans and bank lobbyists were allowed to define her, nor quell the attacks on her heritage.

“Sometimes there are fights that you know you’re not going to win and they’re worth having, but in some ways I’m not sure they even put up a fight. It was almost over before it began,” Van Tol said.

When asked to respond to Sen. Marco Rubio (R-Fla.) calling Omarova a “communist” last month, White House press secretary Jen Psaki touted criticism from Sen. Elizabeth Warren (D-Mass) of similar attacks and insisted Omarova was “eminently qualified.” After Omarova pulled out of consideration, the White House said she “was subjected to inappropriate, often very personal, unfair, and completely unacceptable attacks.”

The attacks on Omarova’s heritage subsumed most of the conversation about her actual policy views, and her supporters said the barrage derailed key aspects of the confirmation process. While Omarova had a brief stint in D.C. during the Bush administration, she was unable to introduce herself to most of the senators and leaders of influential outside groups whose support she needed.

“Once we began hearing the assaults on her person, we weren’t surprised because she was going to have to spend more time addressing that issue than meeting with key stakeholders with whom she would probably want to meet, and that’s just the nature of the beast,” said Lisa Rice, president and CEO of the National Fair Housing Alliance, who said she was unable to meet with Omarova before she withdrew.

Those who supported Omarova are now concerned about how Biden will respond to the setback. The OCC is currently led by acting Comptroller Michael Hsu, who is well-liked among Democrats and considered by most to be a viable full-time nominee should Biden pick him.

Biden had wrestled with his choice for OCC for nine months before settling on Omarova, and those who supported her fear that the president’s ambitions could be scaled back by her defeat. 

“Given how difficult the process has been … you may have some very qualified individuals who might now be more hesitant and their willingness to pursue this opportunity,” said Kathryn Judge, a banking law professor at Columbia University who supported Omarova’s nomination.

Above all, Judge continued, the OCC needs a Senate-confirmed leader to chart the long-term vision for the agency amid massive industry upheavals driven by financial technology and key regulations under reconsideration.

“These are important in controversial questions, and having a leader who is presidentially appointed and Senate-confirmed is key to making sure you’re continuing to make progress not just on the day to day, but on the big picture issues,” she said.

Tags Elizabeth Warren Jen Psaki Joe Biden Jon Tester Marco Rubio Mark Warner Sherrod Brown

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