Biden’s Election for Bank Regulator Worries Banks Are Too Powerful


The White House announced on Thursday that President Biden has chosen Cornell Law School professor Saule Omarova to head the Office of the Currency Supervisor, the regulator that oversees the largest US banks.

If approved, Ms. Omarova, now growing up in Kazakhstan, will be the first woman and the first non-white person to serve as currency controller. The agency, which has around 3,500 employees, is tasked with setting policy around businesses involving banks, from traditional ones like mergers and lending to newer endeavors like cryptocurrency.

“I am honored to be nominated for this role in President Biden’s administration,” Ms. Omarova told The New York Times. “If approved, I will work hard to ensure that our banks remain stable, strong and serve the needs of the American people.”

Ms. Omarova’s nomination involves a months-long search for the job of the best banking regulator; Biden administration knocked out two previous candidates because of progressive and moderate Democrats couldn’t get along with them. But Ms. Omarova’s nomination will require Senate confirmation – a potentially tough challenge given the 50-50 percent split between Republican senators and the Democratic caucus.

Miss OmarovaHaving government experience and spending time in both academia and a white-shoe law firm is an unusual choice. He was a policy adviser in the Treasury Department under President George W. Bush and worked for bank lawyer Randal K. Quarles, who was then a senior Treasury official. Mr. Quarles had hired him from his old firm, Davis Polk & Wardwell.

Mr. Quarles selected Being vice-chairman of supervision of the Federal Reserve, the top bank regulator position at the Federal Reserve, by President Donald J. Trump. If Ms. Omarova is approved, she will become her former boss’s counterpart in the Currency Control Office.

In her academic work, Ms. Omarova proposed bold changes to the financial system, but these proposals—most notably the idea of ​​a public infrastructure investment authority modeled on the structure of the Federal Reserve system—would not be easy to promote from a post. above OCC

Instead, in setting a policy agenda, Ms. Omarova is likely to draw on the core philosophy that she has laid out in her work on the relationship that government should have with banks. He criticized the notion that taxpayers should clean up the mess left by the private sector in times of crisis, but are excluded from a proportional share of the successes of the private sector in prosperous times.

Ms. Omarova also highlighted the risks posed to the financial system by the digitization of assets and the emergence of cryptocurrencies, which are less tightly controlled by governments and could lead to an accumulation of risk that regulators cannot see until it is too late. .

His latest work on digital assets could come in particularly handy if approved. Over the past two years, OCC leaders have grappled with questions about what to do about banks’ attempts to develop digital assets, as well as the proliferation of non-bank financial firms. provide bank-like services on the internet.

Ian Katz, managing director of Capital Alpha Partners, a Washington research firm, said Ms. Omarova will face a tough verification challenge because, despite Mr. Bush’s previous appointment, some of her recent posts on Twitter could be negatively impacted. . Republicans are on the wrong track.

Mr. Katz pointed to a post Ms. Omarova wrote in July: Referring to a news report about the acquisition of a number of small companies by JPMorgan Chase, the nation’s largest bank, Ms. Omarova said, “Does the world need JPMorgan to grow and grow? ? more strong? I just wonder.”

“Everything is multilateral and this election will be seen as a partisan election,” Mr. Katz said. “When you tweet, it’s easier for your competitors to pick you.”

Senator Patrick J. Toomey of Pennsylvania, the top Republican on the Senate banking committee that will first consider Ms. Omarova’s nomination, said in an emailed statement to reporters that he had “serious reservations about his candidacy.” He described his writings as “extreme leftist ideas”.

It is unclear whether most Democrats will embrace Ms. Omarova, but she has already received support from progressive members of the Senate.

Massachusetts Senator Elizabeth Warren said Mr. Biden’s election was “tremendous news”.

“I have no doubt that Saule will be an excellent choice for overseeing and regulating the operations of our nation’s largest banks and a fearless champion for consumers,” Ms Warren said in an emailed statement to The Times.

Sherrod Brown, the Democrat Ohio Senator in charge of the banking committee, also voiced his support. In an emailed statement to reporters, she said Ms Omarova is “knowledgeable in new financial technologies” and “well equipped to work with stakeholders in our financial system”.

“I urge my colleagues on the Banking and Housing Committee to support this historic candidate,” Mr. Brown said.



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