Biden’s pick for banking regulator worries banks are getting too powerful

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President Biden has chosen Cornell Law School professor Saule Omarova to head the Office of the Comptroller of the Currency, the regulator overseeing America’s largest banks, according to a White House official.

If confirmed, Ms Omarova, who grew up in what is now Kazakhstan, will be the first woman and the first non-white person to serve as the Comptroller of the Currency. The agency, which has around 3,500 employees, is responsible for setting policy regarding which businesses banks engage in – from traditional businesses like mergers and loans to newer endeavors like cryptocurrency.

“I am deeply honored to be nominated for this role in President Biden’s administration,” Omarova said in a statement to The New York Times. “If this is confirmed, I will work hard to ensure that our banks remain stable, strong and meet the needs of the American people.”

Ms Omarova’s appointment is expected to be announced on Thursday afternoon, said the official, who was not authorized to speak for the award. His appointment crowns a month-long search for the post of senior banking regulator; the Biden administration dropped two previous candidates because Progressive and Moderate Democrats couldn’t agree on them. But Ms Omarova’s appointment will require Senate confirmation – a potentially difficult battle given the 50-50 split between Republican senators and the Democratic caucus.

Ms Omarova, who has experience in government and has spent time in both academia and a white-shoe law firm, is an unusual choice. She was a political adviser in the Treasury Department under President George W. Bush, working for banking attorney Randal K. Quarles, who then held the post of senior treasury official. Mr. Quarles had hired her from his old company, Davis Polk & Wardwell.

Mr. Quarles was chosen by President Donald J. Trump to be the Federal Reserve’s vice chairman for oversight, the central banking regulatory post at the central bank. If Ms Omarova is confirmed, she will be her former boss’s counterpart in the Office of the Comptroller of the Currency.

In her academic work, Omarova proposed bold changes to the financial system, but such proposals – including an idea of ​​a public infrastructure investment authority modeled on the Federal Reserve system structure – would not be easy. to be introduced from a station. at the top of the OCC

Instead, in setting a political agenda, Ms Omarova will likely draw on the basic philosophy she has laid out in her work on the relationship the government should have with banks. She criticized the idea that taxpayers often have to clean up the mess left by the private sector in times of crisis, but are excluded from a proportional share of the successes of private industry in good times.

Ms Omarova also highlighted the risks to the financial system posed by the digitization of assets and the advent of cryptocurrencies, which are less tightly controlled by governments and could lead to a build-up of risk that regulators may not see before. let it be too late. .

Her recent work on digital assets could prove particularly useful if confirmed. Over the past two years, OCC leaders have faced questions about how to deal with attempts by banks to develop digital assets, as well as the proliferation of non-bank financial companies offering banking services. on the Internet.

Ian Katz, managing director of Capital Alpha Partners, a Washington-based research firm, said Ms Omarova was likely to face a tough confirmation battle because, even though she was a former Bush appointment, some of her recent posts on Twitter could rub Republicans the wrong way.

Mr Katz pointed to an article Ms Omarova wrote in July: Citing a report on a series of small business acquisitions by JPMorgan Chase, the country’s largest bank, Ms Omarova asked: “The world has- does it need JPMorgan to grow bigger and more powerful? I was just wondering.”

“Everything is very partisan, and this choice will be seen as a partisan choice,” Katz said. “When you tweet, it’s easier for your opponents to pick on you.”

It’s not clear whether most Democrats will adopt Ms Omarova, but she already has the support of at least one progressive Senate member.

Senator Elizabeth Warren of Massachusetts said Mr Biden’s choice for Ms Omarova was “tremendous news”.

“Willow is an excellent choice to oversee and regulate the activities of our nation’s largest banks, and I have no doubt that she will be a fearless champion for consumers,” Ms. Warren said in an emailed statement to The Times. .

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