Michael Hiltzik: Biden nominee Omarova faces an ugly attack because banks know she'd be a tough regulator

Michael Hiltzik, Los Angeles Times on

Published in Business News

On the asset side of the banking ledger, Omarova has made the case for a so-called National Investment Authority that would manage public financing of socially beneficial investments, such as in green energy, other programs aimed at combating global warming, and in physical infrastructure.

As Omarova observed in her white paper on the subject, U.S. investment in clean energy has been "hovering around $56 billion annually," or about one-tenth of what it should be for the U.S. to shoulder its part of the responsibility for fighting global warming.

The National Investment Authority, she wrote optimistically, would "help to solve the climate crisis, create well-paying domestic jobs, enhance the resiliency and productivity of the American economy, and systematically translate the vision of a clean future into tangible socio-economic and political change."

Corporate America and conservatives consider the very idea of the government's deciding what to fund and what not to fund iniquitous. Sen. Mike Rounds, R-S.D., grilled Omarova on her argument, expressed in both "The People's Ledger" and the National Investment Authority paper, that the government should withhold funding from socially "sub-optimal" activities. He demanded that she give examples.

Easy question. Omarova noted that Congress constantly outlaws some banking activities that could theoretically be described as legitimate business dealings, such as money laundering and terrorist financing, to be socially inimical and thus, yes, sub-optimal.

Implicit in her proposals is the obvious fact that the government regularly steps in to finance projects that private enterprise considers unprofitable to build, such as roads, bridges, the Hoover Dam and the like. Private enterprise is happy to take advantage of and collect profits from these projects, once they're built by taxpayers.

Omarova explicitly linked her idea for a National Investment Authority to the example of the Reconstruction Finance Corp., a 1930s-era agency that made government loans to banks and railroad to keep them afloat as the Depression took hold.

Wall Street Journal editorial writers have endorsed the claim that the National Investment Authority is part of her "socialist manifesto"; perhaps they're unaware that the RFC, her model, was conceived and created by Herbert Hoover, the historical figure least likely to be mistaken for a radical socialist, during his presidency in 1932.


Left unexamined in the GOP's effort to brand Omarova as a communist mole is that as comptroller of the currency, Omarova wouldn't have the authority to implement any of these ideas on her own — the comptroller doesn't have any say over the Fed, for example. Her role would be to ensure that the banks under her jurisdiction, meaning any institutions with a federal charter, operate safely and soundly.

Omarova's one viewpoint that might work into that portfolio is her skepticism about cryptocurrency investments, which she considers potentially destabilizing to the economy and could be used to circumvent consumer protections.

In her Senate testimony, she described her role as working with bankers to make sure that "our banking system really channels credit into the productive enterprise, meaning non-speculative actual businesses." That sounds like a warning shot across the bow of crypto, which is the very definition of a speculative instrument.

Anyway, Omarova made clear that it isn't up to her to decide what's optimal and sub-optimal as a government or indeed a bank's investment portfolio — it's up to Congress.

The Republican position that Omarova is somehow disqualified to serve as comptroller must be some sort of a gag, considering the parade of conflicted timeservers and incompetents who were routinely confirmed by a Republican Senate under Donald Trump — a Health and Human Services secretary from the drug industry, a farm- and water-industry lobbyist as Interior secretary, a union-busting lawyer as Labor secretary, etc., etc.

By contrast, the nervousness of the banking industry about Saule Omarova is the strongest recommendation for her confirmation. Who's in charge of this process, anyway? The public servants elected to the Senate, or the banks that she'll be forcing to behave?

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