By KEN SWEET AP Commercial Writer
NEW YORK (AP) – A fierce battle is waged in Washington over President Biden’s choice to head a generally low-profile agency that oversees the banking industry.
Willow Omarova, 55, was appointed in September to be the country’s next currency controller. If confirmed, she would be the first woman and person of color to run the 158-year-old agency. But his appointment met with stiff opposition from Republicans and the banking industry, with Democrats saying some of the criticism echoed the red fear that gripped the United States after World War II.
The Office of the Comptroller of the Currency is one of the few federal agencies that regulate different parts of the financial system. It oversees about two-thirds of the country’s banking system. Omarova’s previous criticisms of the banking sector have raised concerns among banks that she is a harsh regulator on Wall Street. They are also wary of academic writings in which she has proposed substantial revisions to how banks operate in the United States.
Some Republicans and their conservative media allies have gone further, using her birth in the former Soviet Union to suggest that she favors a government takeover of the banking sector.
Omarova and her supporters say that at best, her critics have unfairly misrepresented her work in academia, and at worst are waging a smear campaign against a longtime expert in financial regulation.
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“I criticized the big banks,” Omarova said Tuesday in an interview with The Associated Press. “Because I saw how the 2008 financial crisis happened and I don’t want that experience to repeat itself.”
Omarova will appear before the Senate Banking Committee on Thursday as part of her appointment.
Omarova was born in Kazakhstan while part of the Soviet Union and immigrated to the United States in 1991. She has worked primarily as a lawyer and, in recent years, at Cornell University as a professor of law. Over the years, she has testified several times as an expert witness on financial regulation. She worked briefly in the administration of President George W. Bush.
Republicans opposed to Omarova say their concerns lay mainly in her past writings and public comments. Last year, she published an article arguing for an overhaul of the country’s banking system that would expand the role of the Federal Reserve by allowing the central bank to hold consumer deposits. Supporters of such a move say the Fed could extend credit faster if needed to individual accounts during an economic downturn. After the Great Recession, banks accumulated deposits and lent little to rebuild their balance sheets.
On the surface, such a proposal could deprive banks of one of their essential sources of funds for lending.
Omarova says the newspaper’s goal was deliberately ambitious and far-reaching, setting aside the political realities of the time. It was written during the COVID-19 pandemic, she said, when trillions of dollars in government aid went to Americans due to the financial fallout from the pandemic. Her proposals require an act of Congress, she said.
“The purpose of this article was basically to push the ongoing academic debate on how to make our financial system more accessible to all,” she said.
Sen. Pat Toomey of Pennsylvania, the leading Republican on the Senate Banking Committee, said Omarova’s previous academic work disqualified her, calling her proposals too radical for her to oversee the OCC. But her questioning of Omarova’s professional qualifications also extended to a personal level. In a letter to Omarova after her appointment, Toomey requested a copy of a graduation paper that she wrote about Karl Marx “in original Russian” when she was a student at the University of Moscow State.
Omarova told the AP that the document was a compulsory course for all undergraduates.
“You write what you were supposed to write. It wasn’t the kind of country where you had the freedom to disagree with the totalitarian regime, “she said.” Frankly, it’s amazing that 32 years later this newspaper is sort of back from the land of the dead. “
In previous comments, Toomey has said that interest in Omarova’s writings from decades ago had nothing to do with her background.
The banking industry has been exceptionally and publicly critical of Omarova’s appointment, mainly raising objections based on its positions on financial regulation.
“Our issues with Dr Omarova have nothing to do with his impressive personal history, but rather his very public support for the end of the bank as we know it,” said Rob Nichols, president of influential American Bankers Association, in a speech last month. .
Omarova says opposition from the banking sector is not surprising.
“I think they are concerned about having an independent and determined regulator who has studied how risks entered the system in previous years,” she told the AP.
The Office of the Comptroller of the Currency is primarily responsible for overseeing medium to large sized banks that operate in multiple states. The OCC is often involved when banks are accused of committing wrongdoing or of threatening the safety and soundness of the financial system. For example, the OCC was heavily involved in the Wells Fargo investigation after it discovered that bank employees had created millions of fake savings and checking accounts for customers.
Omarova continues to receive strong support from the White House as well as most Democrats in the Senate. With Republicans almost guaranteed to be united in opposition, his confirmation will come down to a handful of moderate Democrats such as Jon Tester of Montana, Kyrsten Sinema of Arizona and Joe Manchin of West Virginia. Sinema and Tester both sit on the banking committee.
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