Here’s how Biden could get past Democrats protecting Wall Street

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Five Democrats plan to block the confirmation of Saule Omarova, President Biden’s candidate for the Comptroller of the Currency, who is widely seen as a tough choice for banks at an agency that has long been captured by Wall Street.

Three of the Democrats — Sens. Jon Tester (D-MT), Mark Warner (D-VA) and Kyrsten Sinema (D-AZ) – voted for a 2018 banking deregulation bill that Omarova criticized at the time. In opposing Biden’s choice to regulate the big banks, they are joining the banking lobby, which has waged an unusually intense opposition campaign against law professor Cornell. Senators Mark Kelly (D-AZ) and John Hickenlooper (D-CO) have also indicated they will vote against Omarova.

Following the news, which was reported the day before Thanksgiving by Axios, several progressives have come up with a solution: The White House could appoint Omarova as first deputy controller, a position that does not require confirmation.

Omarova could replace acting comptroller Michael Hsu, placing her as head of the agency, since Biden would not need to appoint a Senate-confirmed comptroller to the top post, said Yevgeny Shrago, political analyst at the agency. within the Public Citizen advocacy group.

The movement has a recent precedent. Two controllers under President Trump, Keith Noreika and Brian Brooks, were never confirmed, but ran the agency as interim controllers. Hsu held the position of Acting Controller for over six months.

Biden is expected to do the same with Omarova, Shrago said. She could be chosen as deputy controller, making her interim director all the powers of a full-fledged chairman.

Noreika and Brooks were very active, despite their nominal interim status. Noreika weakened the Community Reinvestment Act, reduced penalties on banks for violating fair loan laws, and undermined efforts by the Consumer Financial Protection Bureau to reform payday loans. Brooks, famous for financial tech, encouraged cryptocurrency companies to apply for national banking charters and paved the way for banks to provide services to stablecoin issuers.

Omarova could lead the Office of the Comptroller of the Currency (OCC) indefinitely as interim controller, according to Jeff Hauser of the Center for Economic and Policy Research. Although the 1998 Vacancy Reform Act limits the length of time certain interim officials can stay, it does not apply here, Hauser said. Instead, the National Bank Act gives the Secretary of the Treasury full powers to appoint a first deputy without a fixed limit. John Walsh served as Acting Mint Controller from 2010 to 2012, longer than the 210-day vacancy law maximum, setting a recent precedent for the move.

Even if the White House subsequently appointed and confirmed a controller, Omarova could still wield considerable power as the OCC’s second in command. It wouldn’t be the first time the White House has come up with a workaround after a preferred choice turns out to be a lightning rod as confirmation.

Neera Tanden withdrew from the review following searing confirmation hearings after being selected for the role of budget manager. But Tanden, who is the extremely online former chair of a liberal think tank, can now have more influence as a senior advisor in the White House, where she has been given the daunting task of generating a support for the Build Back Better program.

Other examples abound. In 2015, after Elizabeth Warren successfully resisted the appointment of investment banker Antonio Weiss for a senior Treasury position, Barack Obama gave Weiss an unconfirmable position as senior Treasury adviser, at from which he had great latitude to design the Puerto Rico project. punitive debt restructuring.

Hsu, the acting controller since May 10, came to the Federal Reserve’s OCC, which has become one of the Biden administration’s main providers of regulators. Treasury Secretary Janet Yellen and other senior Treasury officials come from the central bank, which some progressives say is more conservative and comfortable with Wall Street than the Democratic-led regulatory agencies.

“I’m very worried about having a Fed group think-tank among banking regulators,” Todd Phillips, director of banking regulation at the Center for American Progress, tweeted Wednesday.

“Nothing prevents them from appointing Omarova as interim controller”, he said. added.

The news that Omarova is unlikely to overcome opposition in the Senate comes days after Biden re-appointed Jerome Powell, a Republican appointed by Trump, to chair the Federal Reserve, despite objections from progressives.

Supporters of Omarova wondered why the White House did not strike a deal with senators who opposed her choice. Tester, who was a big supporter of Powell, was also among Omarova’s most outspoken critics.

Banking committee chairman Sherrod Brown (D-OH) has fought for Omarova, but is simultaneously engaged in a fight to put Lisa Cook on the Fed’s board of governors and is negotiating for additional housing finance in Build Back Better , two objectives that may have hurt crossing Omarova.

Cultural wars over the candidate’s personal history can also be to blame.

OMAROVA’S CONFIRMATION HAS CUT in a brawl over her identity and a meta-argument over whether her identity was relevant to the debate.

A newsletter from the managing director of the Bank Policy Institute drew attention to Omarova’s birth in Kazakhstan and her university scholarship, called the Lenin Personal Academic Scholarship. At the hearing, Republicans debated whether to refer to his personal background. “I don’t know if I should call you ‘professor’ or ‘comrade’,” said Senator John Kennedy (R-LA).

Democrats happily accepted these terms of the debate, responding indignantly to the dreaded Republicans and stressing, by contrast, Omarova’s “historic” status as an immigrant.

In her opening comments and in a key press release issued the morning of the Senate hearing, Brown emphasized the “historic” nature of Omarova’s candidacy. “Professor Omarova will be the first woman, the first person of color and the first immigrant to serve as the Comptroller of the Currency,” Brown said before mentioning any important reasons she was chosen for the job.

An eleventh hour press release from the Senses. Mazie Hirono (D-HI) and Tammy Duckworth (D-IL) also blessed her status as a tripartite minority (woman, immigrant and “person of color”, this is how American liberals describe Omarova’s roots in Kazakhstan. ). In response to Axios reporting that his appointment was in trouble, a White House official told the outlet that he “continues to strongly support his historic appointment.” Others have drawn parallels between Omarova’s grilling and the fact that Lael Brainard did not get the top job after being considered for the Fed chairmanship. (She was nominated instead for the position of Vice President.)

“The number of gender double standards in these nomination efforts this year has been quite staggering,” Todd Tucker, political scientist at the Roosevelt Institute, remark after the hearing of Omarova.

Now that the identity campaign for Omarova has failed, it may be worth pushing back to your limits.

If you speak with law professors and financial regulators, you’ll hear that Omarova is indeed a historically unprecedented contender for comptroller, not because of her physical appearance, but because she is an unusually sharp critic. and frank about the banking sector.

She has led research on physical commodity trading by big banks like Goldman Sachs and Morgan Stanley, publishing detailed and original research on their purchases of assets like oil, gas and metals from distressed companies. .

Omarova’s pioneering work on curbing abuse on Wall Street, along with her critique of Tester and Warner’s deregulation agenda, was the real reason moderates scuttled her appointment. But that dispute was buried in a blanket blitz focused on his alleged victimization.

“If confirmed, Omarova would be the first woman, the first immigrant and the first person of color to run the 158-year-old agency,” the Washington Post dutifully recites in its article on the audience, which focuses on Kennedy’s offensive comments. Only the last two paragraphs of the article mention that partisan sniping is “probably less important to its plight than decision-making by a pair of moderate Democrats” who resent its past objections to their bank deregulation.

By proclaiming emphatically and insistently over objections that Omarova is “eminently qualified,” Democrats and the liberal media have come to protest too much.

In this breathtaking environment, it was easy for pro-bank moderates to step in, frowning, and in one gentle movement doom the ad hominems while raising reasonable concerns about its balance sheet. Given the screeches of progressives and the largely irrelevant defense of Omarova, you could be forgiven for not realizing that these concerns are counterfeit.