A key Senate Democrat has voiced misgivings about President Joe Biden’s nomination for a top job overseeing the nation’s banks, creating a new potential obstacle in a bruising confirmation fight that has separately been marked by charges of racism and xenophobia against some Republicans.
Sen. Jon Tester (D-Mont.), a member of the Banking Committee that will vet the nominee, said he has “concerns” about Saule Omarova as comptroller of the currency, an ominous sign for a candidate who will likely need party-line support in an evenly split Senate. Omarova has gotten fierce pushback from Republicans for wanting to allow the Federal Reserve to provide bank accounts for Americans, rather than private institutions, a move that she says will “‘end banking’ as we know it.”
Tester, a moderate who has often gone to bat for community banks, didn’t suggest outright opposition at this point. “I want to give her a fair shake, but I do have concerns,” he told POLITICO Monday evening. He declined to be more specific: “I will hold off until after I meet with her.”
Omarova, a professor at Cornell Law School, is one of a number of progressive-backed nominees whom Biden has tapped to become regulators, including the heads of the SEC, the FTC and the Consumer Financial Protection Bureau. But her nomination has been the target of especially scathing attacks over her views that the government should play a greater role in the financial system, including rare opposition from the U.S. Chamber of Commerce, which generally stays out of confirmation battles.
“Dr. Omarova would relegate community banks to ‘pass through’ entities that hold their deposits on behalf of the Federal Reserve, effectively eliminating the community banking model that not only provides the U.S. the most diverse and competitive banking system in the world, but also meets the unique and evolving needs of small businesses and consumers in communities across the country,” American Bankers Association President Rob Nichols said in a speech this week.
Omarova would not have the ability, legally or practically, to implement customer accounts at the central bank, which is an entirely separate agency from the Office of the Comptroller of the Currency. But she would bring to the job a deep skepticism about the country’s megabanks and their role as dominant players in financial markets. She has suggested that the current regulatory framework is too slow-moving to properly oversee those firms.
She has also suggested that advocates of financial technology and cryptocurrency — often touted as the wave of the future for finance — have overstated the benefits of those developments for consumers.
The OCC, which has at times been accused of being too cozy with the banks it oversees, is responsible for supervising national banks. The next comptroller would grapple with how to reduce the number of people who are shut out of the financial system and how to regulate the national banking system at a time of technological upheaval, with traditional lenders confronting both competition and business opportunities from upstart online lenders and financial apps.
Omarova has received strong support from Senate Banking Chair Sherrod Brown (D-Ohio), while Sen. Chris Van Hollen (D-Md.) told reporters he was “very favorably inclined” toward her. Sen. Mark Warner (D-Va.), another moderate on the banking panel, hasn’t given any inclination as to his stance: “I haven’t had a chance to meet her,” he said in an interview.
But the nomination process has become increasingly tense as it relates to her ideology.
Sen. Pat Toomey of Pennsylvania, the top Republican on the Banking Committee, has pressed Omarova, who grew up in the then-Soviet state of Kazakhstan, to release her undergraduate thesis on Karl Marx. Toomey said in a speech on the Senate floor earlier this month that he didn’t think he’d seen “a more radical choice for any regulatory spot in our federal government.”
“Where would a person even come up with these ideas? How does it even happen that it occurs to someone to think of these things?” he said. “Maybe a contributing factor could be if a person grew up in the former Soviet Union and went to Moscow State University and attended on a V.I. Lenin academic scholarship.”
Her defenders, including Brown, have criticized the move as an unfair effort to paint her as a communist, while Omarova herself recently suggested that some of the resistance to her might be motivated by racism. If confirmed, she would be the first permanent comptroller who is not a white man.
“I am an easy target: an immigrant, a woman, a minority,” Omarova told the Financial Times last week. She also said there was “no academic freedom” in the USSR, adding that her thesis was “a mandatory assigned topic.”
Asked by the FT if she thought some of the criticism of her was racist, Omarova said: “I think that is true.”
In the same interview, she said her grandmother had been orphaned by the government of Soviet leader Joseph Stalin, which “sent her entire family to Siberia and they died there.”
“Her family was destroyed because they were educated Kazakhs who didn’t join the party,” she added.
Toomey rejected the idea that Omarova’s background was a factor in his opposition to her.
“That fact of her background has no bearing whatsoever on my judgment about how profoundly misguided the policies she has advocated are and it is perfectly appropriate for us to examine those policies,” he said at a recent hearing.