Biden’s pick for bank regulator faces rocky Senate hearing over unorthodox research ideas

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  • Soule Omarova, the choice of President Joe Biden to lead the OCC as one of the country’s top bank regulators, is set for a fiery nomination hearing.
  • While Republicans caution against recommending a candidate whose academic work calls to “end banking as we know it”, it has also faced skepticism from Sen. John Tester, a Democrat.
  • Only a Democratic defector is likely to end his nomination on a vote of the committee to recommend him to the broader Senate.
  • “I know that the difference between the job of an academic … and a regulator is very limited,” Omarova said on Tuesday.

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WASHINGTON — President Joe Biden’s choice to become one of the nation’s top bank regulators, Soule Omarova, is expected to face a tough round of questioning Thursday morning from senators related to his research that explores fundamental changes in the financial industry. .

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The Cornell University law professor is to appear before the Senate Banking Committee, where Republicans and at least one Democrat can pepper the administration’s choice to be controller of the currency.

Lawmakers are certain to grill Omarova over the unconventional views she advocates, including Increasing the power of the Federal Reserve Incorporating consumer banking and comprehensive checks to power the likes of JPMorgan Chase and Wells Fargo.

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While Republicans, including Pennsylvania ranking member Pat Tommy, have long warned against recommending a candidate whose academic work “calls to end banking, as we know it,” he has to be a Democrat from Montana. The skepticism of Sen. John Tester has also been faced.

Only a Democratic defector is likely to end his nomination on a vote of the committee to recommend him to the broader Senate. And, even if he advanced to the Senate with the support of the committee, a single “no” vote from the Democratic ranks could have doomed his appointment.

Testimony is set to begin Thursday at 9:30 a.m. in Washington.

As the nation’s top bank watchdog, the comptroller controls about 1,200 banks with total assets of about $14 trillion, or two-thirds of the entire US banking system. Its representatives work with large banks to ensure that lenders are complying with federal law, providing fair access to financial services and otherwise scrutinizing bank management.

Omarova has strongly opposed both the GOP and banking industry lobbyists, who say her views promote an excessive role for the government that would harm the business of lenders large and small.

Rob Nichols, president of the American Bankers’ Association, said in October, “Dr. Omarova will remove community banks to ‘pass’ their deposits to entities from the Federal Reserve, effectively ending the community banking model. ” “We respectfully—but strictly—disagree with those positions and believe they are out of step with the role they are being considered for.”

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When asked about that characteristic, Omarova said in an interview that her academic pursuits are just that: exploratory and theoretical.

“I’m not a caricature that I often see when I watch coverage of myself,” she said Tuesday afternoon via video chat. “I know that the difference between the job of an academic and the freedom of academics in terms of the pursuit of ideas … and the job of a regulator is very limited.”

“There is a statutory mandate for the agency, there is a specific toolkit, there are goals that Congress has set for the agency,” she said. “The key that’s missing in all these discussions is my understanding of that key difference.”

Sherrod Brown, D-Ohio, say the warnings from industry and Republicans are misguided, unfairly portray him as anti-bank and fail to acknowledge his decades of experience in banking law. Huh.

“More than 70 financial regulatory experts across the political spectrum, including several former bankers, have supported his nomination,” Brown’s opening statement said. “From growing up in the Soviet Union, to having to endure this last month of personal attacks with dignity, to avoid building a new life here, Ms. Omarova has demonstrated the strength and independence to be a fair, impartial . , and strict controllers.”

Omarova has explained that many of her academic papers were motivated by her interest in protecting American taxpayers from taking excessive risk on lenders and preventing future bank bailouts as seen during the financial crisis of 2007–2009.

Her supporters claim that the criticism she faces is the product of discrimination based on where she grew up and was educated. She grew up in Kazakhstan when it was part of the Soviet Union and is a graduate of Moscow State University.

Wade Henderson, chairman of the Leadership Conference on Civil and Human Rights, wrote on Tuesday that he was disappointed by what he classified as “shameful and discriminatory public attacks” on Omarova.

“We will note that if Professor Omarova was a candidate for virtually any other job, discrimination on the basis of her national origin would be a violation of Title VII of the Civil Rights Act of 1964 and several other civil rights laws,” he wrote in his Letter to ABA’s Nichols and other banking-industry advocates,

Nichols insists that his complaints with Omarova’s candidacy “have nothing to do with her impressive personal background.”

Omarova said, if confirmed, she would like to coordinate with the Federal Reserve and the Federal Deposit Insurance Corp. to study how to protect smaller banks in more rural areas of the country, such as New York. .

“Having a local bank that knows what small businesses need on the ground and can really make a credit decision based on their understanding of who these people are and what they are doing is kind of the bread and butter, economic There is an American component to prosperity and local job creation,” he said.

“I think it will be important to understand where community banks can become burdened with different needs,” he said.

Those comments may appeal to the prominent Democratic holdout tester, a liberal and community bank advocate who joined Republicans last month in expressing reservations about his candidacy.

His office told CNBC in October that “his previous statements about the government’s role in the financial system have raised concerns about his ability to serve impartially,” but he has spoken to him about his concerns face-to-face. Was eager to talk up front.

The examiner’s office confirmed that the two had met since then, and the senator looked forward to hearing from him again on Thursday. A spokesman declined to say whether their meeting was enough to earn his support.

Even if the examiner eventually agrees to support Biden’s choice to lead the OCC, she could face a razor-thin vote in the broader Senate, 50 between the two parties. -50 can be split. That’s because Democratic Sen. Joe Manchin of West Virginia and Sen. Kirsten Cinema of Arizona both told the White House that they had doubts about his candidacy, according to Axios.

Sinima’s office did not respond to CNBC’s request for comment, while a representative for Manchin declined to comment.

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