Biden chooses to lead banking regulator amid Democratic resistance in Senate

Omarova willow

United States Committee on Banking, Housing and Urban Affairs

The choice of President Joe Biden to head one of Washington’s most important banking regulators may not have enough backing to be confirmed in the Senate.

Senate Democrats are divided over whether to back Saule Omarova, Biden’s indicated choice to head the Office of the Comptroller of the Currency, putting his candidacy at risk.

Any Democratic defection, or any indication of it, could force the Senate leadership to rescind the nomination before putting Omarova to the vote.

His selection, coupled with his take on how to reform the US banking system, has prompted several Senate Democrats or their staff to complain to the White House and suggest that the president’s choice will be difficult to support on Capitol Hill. , according to a person familiar with the matter.

This person declined to be named in order to speak openly about private discussions between the White House and Senate offices.

Others surrounding the OCC nomination process said a handful of moderate Democrats had reservations about Omarova and her aspirations to “end banking as we know it”, as she suggested so in a Vanderbilt Law Review article.

These people warned that skeptical senators probably had not yet made a final decision, but were leaning against his candidacy.

Senator Jon Tester, D-Mont., Told CNBC on Tuesday that he was concerned about Omarova’s candidacy. Tester, known in the Senate as a champion of community banking, has not indicated whether he is outright opposed.

“Some of Ms. Omarova’s past statements on the role of government in the financial system raise concerns about its ability to serve impartially in the Office of the Comptroller of the Currency,” he said. “I can’t wait to meet her to discuss it.

Tester, a moderate member of the Senate Banking Committee, would also vote on whether to recommend Omarova to the enlarged chamber. A representative for Senator Mark Warner, another moderate on the banking committee, said the Virginia Democrat has yet to make a decision on his support for Omarova.

Biden announced in September his intention to appoint Omarova as Comptroller of the Currency, the highest post in an independent branch of the Treasury Department that oversees the nation’s largest banks, including JPMorgan Chase, Wells Fargo and Bank of America.

The office of the chairman of the banking committee, Senator Sherrod Brown, D-Ohio, a strong supporter of Omarova, reiterated its support for Biden’s choice.

“Senator Brown and the White House continue to push back against misleading statements by Republicans against Ms. Omarova’s character and political positions,” a spokesperson said.

The White House continues to support Omarova’s appointment, an official said.

Notably, the White House has yet to officially submit Senate nomination papers, despite Biden’s stated intention to nominate. If confirmed, Omarova, hailed by her supporters as a brilliant communicator with solid credentials, would be the first controller who isn’t a white man.

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The OCC is considered one of the most powerful banking regulators in the country, with a function and rank similar to that of the Federal Deposit Insurance Corp. and the Federal Reserve.

The Supervisor regulates approximately 1,200 banks with total assets of approximately $ 14 trillion, or two-thirds of the entire US banking system. Its representatives work with the nation’s largest lenders to keep banks safe by complying with federal law, providing fair access to financial services, and otherwise scrutinizing bank management.

In a committee divided between 12 Democrats and 12 Republicans and in a 50-50 split Senate, a single “no” from the majority could doom a presidential candidate. Republicans are universally opposed to his candidacy.

The office of Senate Majority Leader Chuck Schumer did not respond to multiple requests for comment.

With very little time left by the end of the year, Schumer would likely find it difficult to devote resources to a thorny OCC nomination and risk embarrassing the party with the possibility of a failed vote.

Instead, Schumer wants to maximize the time and energy to sort out the Democrats’ multibillion-dollar poverty and climate reconciliation bill, a defense appropriations measure, or bypass another thorny debate over the limit. debt.

Omarova, a professor of law at Cornell University, has advocated for years for much stricter rules on the banking industry, including the transfer of consumer banking services to the Fed from private institutions. Cornell did not immediately respond to CNBC’s request for Omarova’s comment.

Many Republicans have cautioned against her candidacy since Biden announced plans to nominate her last month.

Sen. Pat Toomey, Republican from Pennsylvania and a leading member of the Banking Committee, said in a press release earlier this month that he did not think he “ever saw a more drastic choice for a regulatory position within of our federal government “.

“There are a lot of extraordinary and radical things here, but maybe the heart of it all is that Ms. Omarova doesn’t just want tighter regulation of banks,” he added. “She clearly has an aversion to anything resembling free market capitalism.

In a recent article, Omarova defended the “democratization” of money by restructuring the Fed to generate and allocate financial resources in the US economy as a way to combat the advent of thousands of new digital currencies and the risks posed. by cryptocurrencies.

“This article offers a model for reshaping the basic architecture and dynamics of modern finance,” she wrote. “This is particularly urgent in light of the ongoing digitalization of finance, which includes the rapid proliferation of private sector-issued digital currency and privately-run digital payment systems. “

The Biden administration has failed to fill the OCC position to date. The progressive opposition forced the White House to drop former candidate Michael Barr earlier this year, leaving former Fed official Michael Hsu as acting chief of the OCC since May.

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