Biden’s nominee for bank regulator faces hostile opposition

Nov 17, 2021, 9:33 AM | Updated: 12:50 pm

NEW YORK (AP) — A fierce battle is being waged in Washington over President Biden’s choice to lead a typically low-profile agency that oversees the banking industry.

Saule Omarova, 55, was nominated in September to be the nation’s next comptroller of the currency. If confirmed, she would be the first woman and person of color to run the 158-year-old agency. But her nomination has drawn intense opposition from Republicans and the banking industry, with Democrats saying some of the criticism echoes the Red Scare that plagued the U.S. after World War II.

The Office of the Comptroller of the Currency is one of a handful of federal agencies that regulate different parts of the financial system. It oversees about two-thirds of the nation’s banking system. Omarova’s previous criticism of the banking industry makes the banks fearful she will be a tough regulator for Wall Street. They also are wary because of academic writings in which she has proposed substantial overhauls to how banks operate in the U.S.

Some Republicans and their allies in conservative media have gone further, using her birth in the former Soviet Union to suggest she favors a government takeover of the banking industry.

Omarova and her supporters say that, at best, her critics have unfairly mischaracterized her work in academia and, at worst, are conducting a smear campaign against a long-respected expert in financial regulation.

“I have been a critic of the big banks,” Omarova said Tuesday in an interview with The Associated Press. “Because I have seen how the 2008 financial crisis came to be and I don’t want that experience to be repeated.”

Omarova will appear in front of the Senate Banking Committee on Thursday as part of her nomination.

Omarova was born in Kazakhstan when it was part of the Soviet Union and immigrated to the U.S. in 1991. She has worked primarily as a lawyer and, for the last several years, at Cornell University as a professor of law. Over the years she has testified numerous times as an expert witness on financial regulation. She worked briefly in the administration of President George W. Bush.

Republicans opposed to Omarova say their concerns lay primarily in her past writings and public comments. Last year, she published a paper arguing for an overhaul of the nation’s banking system that would expand the Federal Reserve’s role by allowing the central bank to hold consumer deposits. Proponents of such a move say the Fed could extend credit more quickly when needed to individual accounts during times of economic downturns. Following the Great Recession, banks hoarded deposits and did little lending to rebuild their balance sheets.

On the surface, such a proposal could strip banks of one of their critical sources of funds to make loans.

Omarova says the paper’s purpose was deliberately ambitious and broad-reaching, setting aside the political realities of the day. It was written during the COVID-19 pandemic, she said, when trillions of dollars of government aid was going to Americans due to the financial repercussions of the pandemic. Her proposals require an act of Congress, she said.

“The purpose of that paper was basically to push the ongoing academic debate on how to make our financial system more accessible to all people,” she said.

Sen. Pat Toomey of Pennsylvania, the ranking Republican on the Senate Banking Committee, has said Omarova’s previous academic work disqualifies her, calling her proposals too radical for her to oversee the OCC. But his questioning of Omarova’s professional qualifications has spilled into the personal as well. In a letter to Omarova after she was nominated, 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.

Omarova told the AP that the paper was required coursework for all undergraduates.

“You write what you were supposed to write. This was not the kind of country where you had the freedom to disagree with the totalitarian regime,” she said. “Frankly it’s amazing that 32 years later, this paper is somehow back from the land of the dead.”

In previous comments, Toomey has said that the interest in Omarova’s writings from decades ago has nothing to do with her background.

The banking industry has been unusually and publicly critical of Omarova’s nomination, mostly raising objections based on her positions on financial regulation.

“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,” Rob Nichols, president of the influential American Bankers Association, said in a speech last month.

Omarova says the banking industry’s opposition is not surprising.

“I think they are worried about having a strong-minded, independent regulator that has studied how risks came into the system in prior years,” she told the AP.

The Office of the Comptroller of the Currency is primarily responsible for overseeing mid-size to large banks that operate in multiple states. The OCC is often involved when banks are alleged to have committed wrongdoing or to threaten the safety and soundness of the financial system. For example, the OCC was heavily involved with the investigation into Wells Fargo after it was discovered that the bank’s employees had created millions of fake savings and checking accounts for clients.

Omarova continues to receive strong support both from the White House as well as most Senate Democrats. With Republicans almost assured to be united in opposition, her confirmation will come down to a handful of moderate Democrats such as Jon Tester of Montana, Kyrsten Sinema of Arizona and West Virginia’s Joe Manchin. Both Sinema and Tester sit on the Banking Committee.

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

AP

A person walks by a SoftBank shop on Monday, Aug. 8, 2022, in Tokyo. Japanese technology company So...
Associated Press

Japan tech giant SoftBank posts $23 billion quarterly loss

TOKYO (AP) — Japanese technology company SoftBank Group posted a $23.4 billion loss in the April-June quarter as the value of its investments sank amid global worries about inflation and interest rates. SoftBank Group Corp.’s loss of 3.16 trillion yen was a reversal from its 762 billion yen profit in the same quarter a year […]
3 hours ago
Exterior damage from a fire is seen at the Mountain B pub in the Sattahip district of Chonburi prov...
Associated Press

Thai pub owner charged in connection with deadly blaze

BANGKOK (AP) — The owner of a music pub in eastern Thailand where a fire last week killed 15 people and injured more than three dozen others was released on bail when he was brought to court Monday to hear criminal charges against him. Pongsiri Panprasong, owner of the Mountain B pub in Sattahip district […]
3 hours ago
Associated Press

Productivity, consumer prices, Cardinal Health earns

A look at some of the key business events and economic indicators upcoming this week: ECONOMIC BELLWETHER Economists project that U.S. worker productivity fell in the April-June period for the second consecutive quarter. The Labor Department is expected to report Tuesday that nonfarm labor productivity fell in the second quarter at an annual rate of […]
3 hours ago
Liudmila Samsonova, of Russia, poses with the trophy after she won the final at the Citi Open tenni...
Associated Press

Russian tennis players collect 3 titles at US Open tuneups

WASHINGTON (AP) — It was quite a week for Russia’s professional tennis players — four tournaments, three titles. One of them, Liudmila Samsonova, thinks it might not be merely a coincidence that this recent run of success for her, Daria Kasatkina and Daniil Medvedev comes shortly after they were banned from competing at Wimbledon because […]
1 day ago
Lyubov Mahlii, 76, pulls a crate of water bottles up the stairs to her fifth floor apartment after ...
Associated Press

As summer wanes, water crisis looms for east Ukrainian city

SLOVIANSK, Ukraine (AP) — The echo of artillery shells thundering in the distance mingles with the din of people gathered around Sloviansk’s public water pumps, piercing the uneasy quiet that smothers the nearly deserted streets of this eastern Ukrainian city. The members of Sloviansk’s dwindling population only emerge — a few minutes at a time […]
1 day ago
Palestinians celebrate the cease-fire agreement between Israel and Islamic Jihad Movement in Gaza C...
Associated Press

Fragile cease-fire between Israel, Gaza militants holding

GAZA CITY, Gaza Strip (AP) — A fragile cease-fire deal to end nearly three days of fighting between Israel and Palestinian militants in Gaza held into Monday morning — a sign the latest round of violence may have abated. The flare-up was the worst fighting between Israel and Gaza militant groups since Israel and Gaza’s […]
1 day ago

Sponsored Articles

(Courtesy Condor)...
Condor Airlines

Condor Airlines shows passion for destinations from Sky Harbor with new-look aircraft

Condor Airlines brings passion to each flight and connects people to their dream destinations throughout the world.
...
Carla Berg, MHS, Deputy Director, Public Health Services, Arizona Department of Health Services

Vaccines are safe if you are pregnant or breastfeeding

Are you pregnant? Do you have a friend or loved one who’s expecting?
...
Carla Berg, MHS, Deputy Director, Public Health Services, Arizona Department of Health Services

Update your child’s vaccines before kindergarten

So, your little one starts kindergarten soon. How exciting! You still have a few months before the school year starts, so now’s the time to make sure students-to-be have the vaccines needed to stay safe as they head into a new chapter of life.
Biden’s nominee for bank regulator faces hostile opposition