Senate Republicans came out swinging against President Joe Biden’s nominee to head the regulator of federally chartered banks during a confirmation hearing Thursday.
Biden nominated Cornell Law professor Saule Omarova to the role of Comptroller of the Currency, a regulator housed in the U.S. Treasury Department that oversees some of the nation’s largest banks, including Goldman Sachs Group Inc. GS, +0.08%, Wells Fargo & Co. WFC, and Bank of America Corp. BAC, -0.02%
“Taken in their totality, her ideas amount to a socialist manifesto for American financial services,” said Sen. Pat Toomey of Pennsylvania, the ranking Republican on the Senate Banking Committee. “She wants to nationalize the banking system, put in place price controls, create a command-and-control economy where the government allocates resources explicitly.”
Toomey was referring to a paper Omarova published last year in which she speculated on the possibility of the Federal Reserve offering retail banking accounts to Americans and having those accounts ” fully replace—rather than compete with—private bank deposits.”
Toomey and other Republicans interpreted the article as Omarova advocating for a complete public takeover of the retail banking system. She argued that the paper was merely an academic exercise that aimed to understand the implications of the emergence of both private digital currencies like Diem, a stablecoin initially proposed by Facebook, and public digital currencies like a Fed-issued digital dollar.
“This paper was written in the context of an ongoing academic debate on how to approach digitizing the dollar, because this seems to be inevitable,” she said.
Several Democrats also expressed some reservations about Omarova’s past statements, including Montana Democrat Sen. Jon Tester.
“I have significant concerns about positions that you have taken…related to our financial system bank regulations,” Tester said, pointing to her criticism of a 2018 law that loosened regulations on financial firms with between $50 billion and $250 billion in assets.
Tester is one of seven Democrats whom Politico reported Thursday have “reservations” about her nomination. Others banking committee members Sen. Mark Warner of Virginia, Sen. Kyrsten Sinema of Arizona, and Sen. Raphael Warnock of Virginia.
In a Senate split 50-50 between Democrats and Republicans, Omarova would need unanimous support of Senate Democrats to be confirmed.
The hearings most contentious moment was when Republican Sen. John Kennedy of Louisiana questioned Omarova about growing up in the Soviet Union and her childhood associations with the Communist Party. Kennedy asked whether Omarova was a member of the USSR’s “communist youth organization,” and said that he didn’t “know whether to call you professor or comrade.”
Omarova responded that she was a member of the Komsomol, which was a communist youth group that “was part of normal progress in school.” Kennedy then asked if she ever formally resigned from the organization, prompting Democratic Senator Sherrod Brown, the chairman of the committee, to interrupt Senator Kennedy to point out that Omarova “renounced her Soviet citizenship” more than thirty years ago.
“We have prior to this hearing witnessed in my memory the worst character assassination aimed at a nominee since I’ve been here,” Brown said in closing, referring in part to Sen. Toomey’s public request in October that Omarova provide a copy of her unpublished undergraduate thesis she wrote for Moscow State University on Karl Marx’s writings more than thirty years ago.
“Senator Kennedy repeated the same vile, disgusting attacks we’ve heard all along,” Brown said. “Attacking a nominees positions is one thing, calling a nominee ‘comrade’ — as if we don’t know what that means — is something else.”
Outside analysts are not optimistic that Omarova will be confirmed by the Senate. Capital Alpha Partners analyst Ian Katz predicted in September that there was just a 35% chance she would be confirmed by the Senate.
Meanwhile, Beacon Policy Advisors analysts wrote in a Thursday note that there is a “very good chance that at least one moderate Senate Democrat may also believe that her structural positions are anathema to their own views,” thus dooming her nomination in the face of united Republican opposition.