The Biden administration’s pick for a top bank regulator role faced fire on Capitol Hill on Thursday, spending a good chunk of her nomination clarifying her views to a slew of hostile GOP senators — and at least a pair of Democrats — which left her confirmation prospects unclear at best.
Saule Omarova, a law professor at Cornell Law School, testified to the Senate Banking Committee on Thursday for the head job at the Office of the Comptroller of the Currency. The OCC, which regulates national banks and federal savings associations, also works alongside the Federal Reserve and the Federal Deposit Insurance Corporation in policing the entire U.S. banking industry.
But Omarova, who worked as a special advisor in the Treasury Department during the George W. Bush administration, fielded a range of questions from mostly Republicans about writings they described as “radical.”
Omarova defended her comments to “effectively end banking’ as we know it” — part of an academic paper published last year hypothesizing a scenario where the Fed offers checking and savings accounts through its own digital dollar (something the OCC would not be able to do).
Omarova insisted she was not advocating for the policy, just suggesting a policy option.
When asked whether she wanted to follow through on crowding out private bank checking and savings accounts, Omarova replied, “No I do not. I believe our banking system is the best in the world.”
However, Republicans still voiced strong opposition to Omarova, saying outright that they planned to vote down her nomination.
Senator Tim Scott (R-S.C.) tore into Omarova, saying, “I cannot think of a nominee more poorly suited based solely on the public statements and the weight of your writings.” He called the paper in question “disturbing.”
Senators weren’t just testy with Omarova; they sparred with each other too. Senator John Kennedy (R-La.) asked Omarova whether she used to be a member of a group called the young communists. “I don’t mean disrespect, but I don’t know whether to call you professor or comrade,” Kennedy said.
Senate Banking Committee Chair Sherrod Brown (D-Ohio) exchanged barbs with Kennedy, characterizing the Louisiana senator’s remarks as “character assassination.” Scott, alongside other GOP members, largely skirted bringing up Omarova’s background growing up in the Soviet Union.
She has also criticized the fossil fuel industry, once advocating for the bankruptcy of oil, coal and gas companies in order to address climate change. On Thursday, the law professor clarified she feels the oil and gas industries are an “important part” of the economy, adding that the OCC is not an agency with jurisdiction over direct climate policy.
“I believe in private allocation of capital,” Omarova said. “And I believe in the fact that it should be banks making decisions to which companies to lend and on what conditions, subject to the regulatory and supervisory requirements, that they do it prudently.”
However, even some Democrats even voiced concern about Omarova’s views, particularly about her opposition to a 2018 bipartisan law that rolled back some of the Dodd-Frank bank regulations installed after the Great Financial Crisis.
Sen. Jon Tester (D-Mt.) said he had “significant concerns” and Sen. Mark Warner (D-Va.) said he was “pretty disappointed” in Omarova’s view that the changes (which both Democrats co-wrote) risked “inadvertently loosening rules” on the big banks.
If both Democrats vote against her, that may tilt the balance against Omarova, given the narrow 50-50 split in the Senate between Democrats and Republicans (Vice President Kamala Harris would serve as the tiebreaker).
Omarova said Thursday that she supported the broad efforts in the legislative package that would alleviate regulatory requirements on smaller community banks.
“If I am the Comptroller of the Currency, community banks will find no better or stronger ally than they would find in me,” Omarova said.
Most Democrats rallied to her defense, with prominent Democratic Senator Elizabeth Warren lashing out at the “vicious smear campaign coordinated by Republicans who are doing the bidding of giant banks that want to keep gobbling up smaller competitors want to keep ripping off their customers and want to keep getting away w it.”
Separately, Minnesota Senator Tina Smith told Yahoo Finance on Thursday that Republican attacks on Omarova were "nothing more than character assassination," and backed the nominee's commitment to community banks.
"I am persuaded by all of the conversations and everything that she said that she is going to be a strong defender of our banking system and she's going to make sure that this banking system is fair and that the big banks, who often in the past have not always been held accountable by the OCC comptroller will be held accountable," Smith said.
"That is the kind of comptroller of the currency that i want to see. And i am going to do everything i can to make sure that she is confirmed," she added.
Editor's note: Republican Tim Scott is the senator from South Carolina.