Saule Omarova has faced a barrage of right-wing attacks in her confirmation battle to become the nation’s top bank regulator. Republicans have focused on the fact that she was born and educated in the former Soviet Union as proof that she might be a secret communist.
In a Senate hearing Thursday, Omarova responded to the xenophobic smears, insisting she is not a communist and pointing out that she could not choose where she was born.
Omarova recounted the story of how her grandmother’s family was sent to Siberia in the 1920s for refusing to join the Communist Party. Omarova, who was born in Kazakhstan and is now a financial law professor at Cornell University Law School, explained her desire as a young person to escape the country of her birth.
“[T]o me, pursuing education and academic excellence was an act of defying political oppression and injustice,” Omarova said in her opening statement before the Senate Banking Committee. “I studied hard, got into the best university I could, and was ultimately able to fulfill my dream of coming to America — the land of opportunity and freedom.”
Sen. Pat Toomey (R-Penn.), the committee’s top Republican, previously attacked Omarova’s current views on banking regulation and national industrial policy as a result of her having grown up “in the former Soviet Union and went to Moscow State University and attended on a V.I. Lenin academic scholarship.” He called on her to release her 1989 thesis on Karl Marx’s economic theories in “the original Russian.”
The banking industry and other conservatives echoed Toomey’s attacks on Omarova’s place of birth, using it as a useful pretext for their opposition to her support for robust banking regulation.
“I thought red scare McCarthyism was rightly relegated to the dustbin of history,” Sen. Sherrod Brown (D-Ohio), the committee’s chairman, said at the time.
Brown reiterated his disgust at the attacks on Omarova and fully endorsed her nomination at the hearing on Thursday.
The GOP opposition to Omarova has been well-known. Yet her confirmation is still in jeopardy not because of Republican senators, but rather two Democrats ― Jon Tester (Mont.) and Mark Warner (Va.) ― who made clear Thursday that they’re wary of her nomination.
Communist, Socialist, Capitalist?
Most committee Republicans attempted to distance themselves from the “red scare” attacks that they and outside conservative allies lobbed at Omarova prior to the hearing by focusing on her academic writings. But that didn’t stop some others from continuing to smear her as a communist.
Sen. John Kennedy (R-La.) asked whether she had officially “resigned from the young communists,” in reference to a youth Soviet group she was in as a child. Omarova responded that all children in the Soviet Union were enrolled in this group and they age out of it in middle school. Further, she could not resign from a group in a country that no longer exists.
“I don’t know whether to call you professor or comrade,” he added.
“I am not a communist,” Omarova responded. “I do not subscribe to that ideology. I could not choose where I was born.”
Brown later called Kennedy’s statements “vile, disgusting attacks.”
Sen. Thom Tillis (R-N.C.) said he did not see “any basis” for alleging “McCarthyism” in the attacks Republicans lobbed at Omarova before pushing her to release her college dissertation from Moscow State University.
Omarova said that her dissertation, the topic of which she says she did not choose and was assigned to her, was written on a typewriter and she did not bring a copy of it to the United States when she permanently left the Soviet Union to attend the University of Wisconsin-Madison in 1991.
For the most part, Republicans stayed away from attacking Omarova as a secret communist agent. They instead focused on her academic papers about the Federal Reserve creating public bank accounts for unbanked Americans, the creation of a National Investment Authority to finance climate projects and regulatory issues related to cryptocurrency along with comments of hers about the transition from a fossil fuel-based energy economy to a renewable energy economy. Still, Republicans labeled the positions in these papers and comments “socialist.”
Sen. Steve Daines (R-Mont.) said that these writings were “radical socialist ideas.”
Omarova argued that she would not have authority to institute the ideas in the papers Republicans found most controversial in the position of comptroller. She said that the papers under question were part of an academic debate and did not necessarily represent policies she advocates.
She also pointed out that one quote from her paper on the creation of public Federal Reserve bank accounts that Republicans have particularly latched on to, that the policy would “end banking as we know it,” was not written by her, but rather she had quoted another source.
Most Democrats on the committee responded to the attacks on Omarova by noting that the opposition was really rooted in her support for robust regulation of the biggest banks and other financial institutions so as to eliminate risk in the system and prevent a repeat of the 2008 financial crisis.
The biggest banks “have declared war on you,” Sen. Elizabeth Warren (D-Mass.) said, because of Omarova’s “willingness to enforce the law to keep our system safe and that you may cut into big bank profits.”
“Are you a capitalist who believes in free markets?” Warren asked.
“Yes I am,” Omarova responded.
But it was the questioning from two Democrats wary of Omarova’s nomination due to the opposition to her nomination from the main Washington trade group for community banks that will decide whether or not she will be confirmed.
Omarova’s nomination will not be decided by the smears directed at her from Republicans, but by two Democrats who helped pass a bill in 2018 eliminating a section of the post-2008 crisis Dodd-Frank financial reforms to help community banks.
Tester said that he had “some significant concerns about positions you’ve taken,” specifically asking her about her opposition to the 2018 Economic Growth, Regulatory Relief, and Consumer Protection Act (S. 2155) that he helped write.
That bill loosened capital requirements imposed by the Dodd-Frank law for some banks and increased the threshold for certain Dodd-Frank regulations from $50 billion in consolidated assets to $250 billion. Omarova argued then that the bill would increase financial risk by helping big banks evade regulations. A Congressional Budget Office report on the bill agreed with this assessment.
Omarova restated her position on the bill at Thursday’s hearing as concern that “inadvertently loosening the regulatory oversight of the largest financial institutions that engage in high-risk trading operations that do not necessarily follow the traditional banking model,” would lead to increased potential for risk in the financial system. She did also note that she supported reducing regulatory burdens for small, community banks and remained largely concerned with large financial institutions.
Tester asked Omarova whether she thought the bill helped big banks.
“Indirectly, it might have helped the big banks,” she answered.
After the hearing, Tester declared that he would state his position on Omarova’s nomination “soon.”
Warner, who also helped write the Economic Growth, Regulatory Relief, and Consumer Protection Act, said that he, like Tester, is “pretty disappointed in your views” on that bill.
“Let me just reiterate that S. 2155 has done a tremendous job of lowering regulatory burden on smaller community banks and I think it’s a great thing,” Omarova responded. “If confirmed as the comptroller, I will fully uphold the congressional intent and make sure that that law is implemented as intended. It actually is not at all incongruent with my views.”
Throughout the hearing, Omarova noted that her views endorsing robust oversight and regulation of banks are focused on the financial risk posed by large financial institutions engaged in non-traditional trading activities to both the national economy and to small community banks.
“I wish the community bankers and their trade associations actually read more carefully what I have written,” Omarova said about the opposition to her nomination from the Independent Community Bankers Association. She added, “If I’m the comptroller, community banks will find no better or stronger ally than they would find in me.”
In her defense, Brown said that Omarova’s writings are actually “sounding an alarm about the future of community banks, actually, not calling for their end.”
This article originally appeared on HuffPost and has been updated.