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Scholars' Letter in Support of Saule Omarova

posted by Adam Levitin

President Biden has nominated Cornell Law Professor Saule Omarova to be the next Comptroller of the Currency. While the Office of the Comptroller of the Currency is not a well-known government agency outside of bank regulation circles, it is among the most important in financial regulation because it is the prudential regulator of national banks—the largest banks in the United States. The OCC is also the primary consumer protection regulator of all national banks with less than $10 billion in net assets, and the Comptroller is a member of the FDIC board. In short, this is a position with substantial influence over the banking industry. 

This week, numerous scholars of financial regulation (including me) sent a letter in support of the nomination to the Chair and Ranking Member of the Senate Banking Committee. We believe that Professor Omarova would make an outstanding Comptroller, and we hope that she will receive a fair hearing even from those who might disagree with her on policy questions. Professor Omarova is a lawyer's lawyer with impeccable credentials for the job. After completing a PhD and JD, she worked at the leading banking law firm and then in the GWBush Treasury Special Advisor to then Under Secretary Randal Quarles, now the Fed's Vice-Chair for Supervision. Her scholarship is careful, restrained, and masterful, and her co-authors include the top banking attorney in the US.  Not only is Professor Omarova's knowledge of banking regulation unsurpassed within the academy, but she would bring a welcome change to the OCC as the first Comptroller who wasn't a either a banker, bank lawyer, or bank lobbyist when nominated. Her independence is much needed at an agency that has often seen banks as its customers, rather than as its regulatory charges. 

Unfortunately, some of the financial services industry opposition to Professor Omarova has veered into xenophobic and McCarthyite dog whistling based on Professor Omarova having grown up in the former Soviet Union. The hypocrisy in this anti-immigrant prejudice is astounding given the way that the same folks who are claiming that Professor Omarova is suspect because of her childhood in the Soviet Union have celebrated another former Soviet bloc immigrant-turned-bank regulator. The dog-whistling has gotten so bad that in a remarkable press release Senate Banking Committee Chair Sherrod Brown (D-Oh) threw down the gauntlet at the "Red Scare" character assassination coming not just from bank lobbyists, but from the Committee's Ranking Member, Senator Pat Toomey (R-Pa). 

The banking industry's decision to proceed through dog whistling suggests that it is reluctant to have it out over the substantive policy positions supported by Professor Omarova. But if you want to see a more sober and measured take on Professor Omarova from a law firm with numerous financial services industry clients, see Gibson Dunn's take here. What the law firm's take for its clients—rather than for political theater—suggests is that the sky won't fall with Comptroller Omarova, but that she will take a more skeptical view of bank activities outside of traditional core activity areas. In other words, it won't be business as usual. And that's the banking industry's real concern here. 

Comments

Why was Yellen opposed to the nomination and doesnt that matter?

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