Monetary Policy

Biden’s Commissar

Saule Omarova testifies before a hearing of the Senate Committee on Banking, Housing, and Urban Affairs in 2018. (Senate Committee on Banking, Housing, and Urban Affairs)

Joe Biden has not governed as the consensus-oriented moderate he portrayed himself as during his inauguration. Depending on the issue, his views have ranged from standard-issue tax-and-spend Democrat to the progressive fringe. But at least he isn’t appointing Soviet sympathizers to government positions.

Right?

Saule Omarova is Biden’s nominee to be comptroller of the currency. Comptroller of the currency is a somewhat obscure position, but it’s a very important post in regulating the financial sector. The position has historically been filled by relatively uncontroversial people, as presidents have understood that the position’s duties are not very political in nature and require fairness and objectivity. Omarova, however, has generated much controversy — and for good reason.

She was born in Kazakhstan in 1966, while it was still a part of the Soviet Union, and graduated from Moscow State University in 1989, which she attended on the Lenin Personal Academic Scholarship. While there, she wrote a thesis titled “Karl Marx’s Economic Analysis and the Theory of Revolution in Das Kapital.” One can see how this might be of interest to senators looking to evaluate Omarova for her fitness to serve in an important capacity in the United States government. Senator Pat Toomey has requested that Omarova turn over her thesis to the Senate Banking Committee. Omarova has not done so.

It is, of course, possible that the paper is an unexceptional piece of college writing that isn’t a cause for concern. But providing one’s previous work to a Senate committee is a pretty normal part of the confirmation process, and Omarova’s refusal to do so is notable.

The Lenin Personal Academic Scholarship is also not in itself disqualifying. As Andrew Stuttaford noted in October, “In totalitarian societies, most people go along, whatever they may actually believe,” and other recipients of the same award have since shown themselves to understand the evils of communism and the unworkability of central planning.

Omarova, however, has made comments rationalizing the Soviet Union. In 2019, she tweeted, “Say what you will about the old USSR” — a sentence starter that is never going to end well — “there was no gender pay gap there.” First of all, that isn’t even true. Second of all, if it were true, what is it supposed to make people say differently about “the old USSR”?

And it’s not just a bad tweet or college indiscretions. Omarova wrote a 71-page paper last year from her post as a law professor at Cornell where she “offers a blueprint for a comprehensive restructuring of the central bank balance sheet as the basis for redesigning the core architecture of modern finance.” The paper is called “The People’s Ledger,” and it argues for the Federal Reserve’s taking over ordinary banking functions to “effectively ‘end banking,’ as we know it.”

As the Wall Street Journal has noted, that paper wasn’t a one-off.

Omarova may not be pro-Soviet in any conventional sense, but, until recently, at least, she appears to have been arguing for a form of central planning that goes far beyond the progressive “mainstream” and that bears too much resemblance for comfort to the way the Soviets believed that the economy should be managed, beliefs that led to the squandering of much of the USSR’s potential and, ultimately, to economic collapse. This was a failure that she witnessed at first hand, but from which she appears to have learned little. That the administration would want to select her for a critical, economically sensitive post says quite a bit, none of it good.

More specifically, and as a purely practical matter, the person in charge of regulating banks should not believe we need to end banking as we know it. It shouldn’t be too hard for President Biden to find a comptroller of the currency without any attachment to a way of economic thinking that belongs, to borrow a phrase popularized by Trotsky, in the dust heap of history. The president should pull this nomination, and, if he doesn’t, the Senate should reject it.

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