Republicans immediately attacked President Biden’s controversial pick for banks regulator Saule Omarova at her nomination hearing on Thursday, quizzing her on what they said was her ‘socialist manifesto for American financial services.’
‘I’ve never seen a more radical nominee to be a federal regulator,’ said Senate Banking Committee Ranking Member Pat Toomey.
Omarova, a law professor at Cornell University who who was born in the Soviet Union, has proved to be one of Biden’s most contentious picks.
Progressive Democrats see a regulator who would bring a tough approach to policing banks after years of soft-touch supervision.
But her Republican critics, such as Toomey view her as a ‘radical’ who wants to nationalize banking.
They have focused on her early life in Kazakhstan, when it was part of the Soviet Union, before she immigrated to the U.S. in 1991.
They have demanded to see her college thesis on Karl Marx and suggest she has not ‘repudiated her Soviet-era views,’ as the Wall Street Journal’s editorial board put it.
Saule Omarova defended herself during her confirmation hearing to become Comptroller of the Currency on Thursday morning, saying her early life in the Soviet Union
Republicans, led by Ranking Member Sen. Pat Toomey, immediately attacked Omarova for what they said were her radical views while Sen. Sherrod Brown, chair of the Senate Banking Committee, defended her against attacks based on her early life in the Soviet Union
An exclusive new photograph shows Omarova as a proud ‘Young Pioneer’ – the Communist youth mass movement – at her Soviet school number 21 in Uralsk, now Oral, in Kazakhstan. She is wearing the red scarf of the movement in a picture dating from 1979-80
Sen. Sherrod Brown, the Democratic chair of the committee, said it was not necessary to see a university thesis written decades earlier by any nominee.
But Toomey said it remained relevant.
‘Reason it is relevant is because it was advertised on her resume up through 2017,’ he said.
‘It would be completely relevant to this discussion.
‘What apparently some of my Democratic colleagues want to really avoid is a full discussion of her policy views but that’s what we’re gonna have this morning.’
He went on to summarize what he believed her views to be.
‘Taken in their totality, her ideas do amount to a socialist manifesto for American financial services,’ he said.
‘She wants to nationalise the banking system and put in place price controls create a command and control economy where the government allocates resources explicitly.’
It set the tone for an at-times bad-tempered hearing, as Democrats accused Republicans of McCarthy-style smears, while Republicans asked whether they should call the nominee ‘professor or comrade.’
Omarova is in line head of the Office of the Comptroller of the Currency, which regulates the assets held by more than 1,000 banks.
It is an important but often obscure position. This time around, however, the background of the nominee and her public positions has triggered heated exchanges.
She has advocated for moving Americans’ financial accounts from private banks to the Federal Reserve and for forcing banks to lose leverage on federal subsidies by becoming ‘non-depository lenders.’
It would diminish the stature of the institutions she’s supposed to regulate.
‘By separating their lending function from their monetary function, the proposed reform will effectively “end banking,” as we know it,’ Omarova wrote in a paper updated in February of this year titled ‘The People’s Ledger.’
Saule Omarova (circled) is photographed during her studies at Moscow State University, in Russia in 1988 when Mikhail Gorbachev was president of the Soviet Union. Republicans have used her early life as fodder for attacks on her nomination
She summed it up more concisely in a 2019 documentary film titled ‘A**holes: A Theory.’ Omarova called Wall Street’s hedge fund-dominated culture a ‘quintessential a**hole industry.’
And video emerged recently of her saying she wanted oil and gas companies to go ‘bankrupt.’
‘We want them to go bankrupt if we want to tackle climate change, right?’ the Soviet-born Omarova said in a clip that was shared online by the conservative-leaning American Accountability Foundation.
Toomey said she had made clear she was intent on replacing the free market in setting prices.
‘I’m sure Americans can’t wait until the Fed starts directly controlling prices for eggs and milk and rent,’ he said.
‘And this isn’t the only time that Professor Omarova has expressed support for government control on wages, as she tweeted in 2019 … her words, and I quote: “Say what you will about the old USSR, there was no gender pay gap. The market doesn’t always know best.”‘
But Brown defended her as a well-qualified candidate who was being smeared.
‘They have a formula: Start with a passing inaccurate reference to your academic work, distort the substance beyond recognition, mix in words – Marx, Lenin, communism – with insinuations about Professor Omarova’s loyalties to her chosen country,’ he said.
‘That’s how Republicans turn a qualified woman into a Marxist bogeyman.’
For her part, Omarova defended her positions and shrugged off the idea that she remained loyal to communism.
‘I’ve lived through that regime. I’ve lived through that system,’ she said. ‘I have absolutely no affection or affiliation for any of those ideas.’
As a Kazakh, she also said her family had been murdered by the Soviet regime.
The backyard of karaoke bar at the address where Saule Omarova lived as a child, 190 Prospekt Lenina, Uralsk (now Oral), Kazakhstan, in the former USSR
A copy of the register from Omarova’s school says she was a member of the Komsomol, or ‘Young Communists’ in the USSR
Democratic Sen. Elizabeth said the ‘vicious smear campaign’ was designed to prevent the confirmation of someone who would take on big banks.
‘It is disgusting,’ she said. ‘And anyone who participates in this malicious character assassination should be ashamed of themselves.’
In a quickfire round of questions she gave Omarova a chance to deny the charges against her.
‘Now one claim is that you intend to nationalise the banking system,’ said Warren. ‘So let’s just get this nonsense out of the way. Does the OCC have the power to end private banking and remove all consumer deposits to a public ledger?’
Omarova answered: ‘Absolutely not.’
Warren continued: ‘If the OCC did have that power, is that something you would support?’
‘And are you a capitalist who believes in free markets?
‘Yes I am,’ said Omarova.
During her opening statement, she also set out how growing up in the Soviet Union before moving to the U.S. made her uniquely qualified.
‘These issues are deeply personal to me,’ she said.
‘Having grown up in an oppressive state-run system, with no free enterprise and no economic opportunity for people like me, I have a unique appreciation for our dynamic and diverse markets.
‘It is what made my life and success possible, and for that I am forever grateful. Every American family should have the same opportunities that my family has had.’
But she set out how she believed the U.S. financial system was flawed and vulnerable to crises.
‘These experiences taught me invaluable lessons about how financial “sausage” is made and how that can lead to devastating financial crises. That is why my academic work has been focused on safeguarding the stability and resilience of our financial system,’ she said.
‘In the 2008 crisis, I saw what happens when powerful market players generate excessive risk and leverage outside of regulators’ view – and leave the American taxpayer to foot the bill when the speculative boom turns bust.
‘We cannot afford a repetition of this destructive scenario, especially now, in the aftermath of the global pandemic.’
The White House has defended Omarova throughout the bruising process.
‘Saule Omarova is eminently qualified and was nominated for this role given her strong track record on regulation and strong academic credentials. The White House strongly supports this historic nomination,’ said an official.