Earlier this week, Cornell Law Professor, Saule Omarova, withdrew from her nomination to become the head of the Office of the Comptroller of the Currency (OCC), the regulator of national banks. Emily Flitter, reporting for the New York Times, said it was because Omarova had been “painted as a communist.” In terms of the full story on why Omarova had to withdraw, that is like pointing to a single droplet of rain as the cause of a hurricane.
In October, the Vanderbilt Law Review published a 69-page paper by Omarova in which she made the following bizarre recommendations to reform the U.S. banking system:
(1) Move all commercial bank deposits from commercial banks to so-called FedAccounts at the Federal Reserve;
(2) Allow the Fed, in “extreme and rare circumstances, when the Fed is unable to control inflation by raising interest rates,” to confiscate deposits from these FedAccounts in order to tighten monetary policy;
(3) Allow the most Wall Street-conflicted regional Fed bank in the country, the New York Fed, when there are “rises in market value at rates suggestive of a bubble trend,” such as with technology stocks today, to “short these securities, thereby putting downward pressure on their prices”;
(4) Eliminate the Federal Deposit Insurance Corporation (FDIC) that insures bank deposits in the U.S. and prevents panic runs on banks;
(5) Consolidate all bank regulatory functions at the OCC – which Omarova was nominated to head.
By early November, Omarova was facing a new controversy when it was revealed that she had called the very industry that she had been nominated to supervise the “quintessential a**hole industry” in a 2019 Canadian feature documentary.
It’s hard to imagine things going downhill from there – but they did.
At 11:41 a.m. on November 18, as Omarova sat before the Senate Banking Committee for her confirmation hearing, Republican Senator Tom Cotton Tweeted the following:
“Saule Omarova stole $214 (~$400 adjusted for inflation) from T.J. Maxx in 1995. She’s woefully unqualified to supervise the banking system.”
It turns out that someone in President Biden’s inner circle had approved the nomination of Omarova, a person arrested for shoplifting when she was 28 years old, to head a key federal regulatory agency overseeing banks with a total of $14 trillion in assets.
President Joe Biden is now three for three in failing to properly vet his nominees to oversee the crime factory on Wall Street. In April there was Alex Oh who had to resign over scandal after just six days on the job as the Director of Enforcement at the Securities and Exchange Commission. Oh had worked for the past two decades as an attorney for Paul, Weiss, Rifkind, Wharton & Garrison, the law firm that major Wall Street banks repeatedly choose to fight their serial fraud charges. Less than seven hours after Wall Street On Parade ran our negative critique on Oh’s fitness for the job, she was out the door at the SEC.
Then there is Kenneth Polite, Biden’s confirmed nominee to head the Criminal Division of the U.S. Department of Justice. In July we were the only financial news outlet to report the story of the multitude of red flags on Polite’s financial disclosure forms. Polite is still in his job. Like Alex Oh, Polite was a law partner at a law firm that defends Wall Street mega banks. Polite’s former law firm is Morgan, Lewis & Bochius, which has plenty of red flags itself. (See our report: Biden’s Crime Chief Had Screaming Red Flags on His Financial Disclosure Form; Senators Ignored Them.)
There are plenty of questions that remain on why progressive Senators, including Sherrod Brown, the Chair of the Senate Banking Committee, continued their support of Omarova long after it was clear that she had been incompetently vetted for the post to which she was nominated. Even yesterday, Brown was doubling down, releasing a statement that included this:
“Despite her unquestioned expertise and her bipartisan record, powerful interests distorted Professor Omarova’s views and writings. In a relentless smear campaign reminiscent of red scare McCarthyism, they have shamefully attacked her family, her heritage, and her commitment to American ideals. I am disappointed that these spurious attacks and misrepresentations of Professor Omarova’s views were not resoundingly rejected in a bipartisan manner.
“One thing is clear: we need regulators at the OCC and beyond who are not in the pockets of Wall Street…”
But that’s the very problem. When Biden nominated Alex Oh and Kenneth Polite, he did not draw from career professionals at the Securities and Exchange Commission or the Department of Justice to fill these key posts. He tapped the law partners of Big Law who make their living defending Wall Street recidivists.
In the case of Omarova, Biden selected a candidate whose writings and statements were so bizarre that it ensured there would be no one permanently at the helm of the OCC for a full year of Biden’s presidency. That must have made mega banks like JPMorgan Chase, which is overseen by the OCC, quite happy. Jamie Dimon, Chairman and CEO of JPMorgan Chase, has been allowed to remain at the helm of the bank by federal regulators, despite his bank being charged with an unprecedented five felony counts since 2014.
Maybe that was the plan all along – to not get someone confirmed to head the OCC.
This first appeared on Wall Street on Parade.