President Biden’s pick to lead a powerful bank regulator is certain to spark a partisan battle in the Senate.
Biden announced Thursday he will nominate Cornell University law professor Saule Omarova to lead the Office of the Comptroller of the Currency (OCC), tapping a fierce critic of big banks for a post with broad power over the industry.
Omarova has argued that major banks have failed to serve broader public needs and that the Federal Reserve should replace private firms in consumer banking.
In a paper published last year, she proposed “a series of structural reforms that would radically redefine the role of a central bank” and “fundamentally alter the operations and systemic footprints of private banks, funds, derivatives dealers, and other financial institutions.” She’s also expressed deep doubts about the benefits of cryptocurrencies amid their growing prominence.
While many of Omarova’s transformative ideas would require legislation or the involvement of other agencies, liberal Democrats and financial sector skeptics are eager for her to tighten the screws on big banks and reverse Trump-era regulatory rollbacks.
“They’re not there to make life easier for banks,” said Gregg Gelzinis, senior policy analyst at the liberal Center for American Progress, of the OCC.
“They’re there to enforce the law, and ensure the banking system is safe and sound and is providing the financial services that businesses and households need to thrive,” he added.
Omarova’s supporters also touted the groundbreaking nature of her nomination, as she would be the first woman and first person of color to lead the OCC as a full-time comptroller.
“Saule Omarova’s nomination to lead the OCC is tremendous news,” said Sen. Elizabeth Warren (D-Mass.), one of many prominent progressives to endorse Biden’s pick. “She is an excellent choice to oversee and regulate the activities of our nation’s largest banks and I have no doubt she’ll be a fearless champion for consumers.”
But Omarova’s controversial stances have drawn intense backlash from Republican lawmakers, meaning she’ll likely need unanimous Democratic support to be confirmed in an evenly split Senate.
Sen. Pat Toomey (Pa.), ranking Republican on the Senate Banking Committee, said Thursday he had “serious reservations” about Omarova’s nomination given her support for “extreme leftist ideas.”
While Toomey is among the most conservative members of the Republican conference, his views are shared widely among GOP senators and could alienate some moderate Democrats.
Bank lobbyists are also mobilizing to defeat her nomination, raising concerns about the impact of Omarova’s “radical” views as the industry faces growing competition.
Rebeca Romero Rainey, president and CEO of the Independent Community Bankers of America (ICBA), expressed concerns that Omarova “would displace locally based community banking and restrict economic growth in local communities.”
“Given these and other policy prescriptions, ICBA has questions about Omarova’s ability to objectively oversee the national banking system and looks forward to working with policymakers as Congress addresses her nomination,” Rainey said in a Thursday statement.
Omarova has been a law professor since 2007, joining Cornell and serving as director of its financial institutions and markets law program after stints with the University of North Carolina at Chapel Hill and Georgetown University.
She also practiced law with Davis Polk & Wardwell, a law firm with a prominent financial institutions group, and served as a special adviser to Randal Quarles, now the Federal Reserve vice chair of supervision, when he was former President George W. Bush’s Treasury under secretary for domestic finance. Quarles has spearheaded several efforts to streamline and ease regulations at the Fed, a stark contrast to the views Omarova put forward after their work together.
“Saule Omarova has spent her career working with both Republicans and Democrats on systemic financial stability issues and is well-versed in new financial technologies,” said Sen. Sherrod Brown (D-Ohio), chairman of the Senate Banking Committee, in a Thursday statement.
“Her experience as a policymaker, in the private sector, and in academia will allow her to work with stakeholders across our financial system to ensure the economy works for everyone, and to protect our economic recovery from the risky activities of Wall Street and other bad actors,” he added.
While Brown highlighted Omarova’s bipartisan background, she is unmistakably aligned with Biden’s previous fiercely progressive financial regulatory nominees, including Securities and Exchange Commission Chairman Gary Gensler and Rohit Chopra, whom Biden tapped to lead the Consumer Financial Protection Bureau.
Like Gensler and Chopra, who’ve vowed to bolster regulations and crack down harder when they’re violated, Omarova would bring a sharp break from her Trump-era predecessors.
Former Comptroller of the Currency Joseph Otting, an ex-banker, focused on streamlining regulations during his time at the OCC and considered banks “customers” of the agency. His successor, former acting Comptroller Brian Brooks, granted national banking charters to three cryptocurrency trading and custody firms, a major victory for the emerging industry as it contends with intense skepticism in Washington, D.C.
“It’s not only important in my opinion to prepare the damage done over the past four years to the financial regulatory framework,” Gelzinis said. “We’re also going to need to meet the moment on these new and emerging risks, and tackling emerging risks has been at the forefront of her scholarship.”
Even so, it remains unclear if moderate Democrats will be willing to overlook some of Omarova’s sweeping proposals as they consider her nomination. Just one Democratic dissent could sink her chances, giving Omarova’s opponents a low bar to clear to defeat her nomination.
“We believe the fighting about Omarova will begin immediately,” said Ian Katz, director at Washington research consultancy Capital Alpha Partners.
“Republicans will cast her as beyond the pale for that job, and we suspect that more quietly, a small number of Democrats will agree,” Katz added.