Published: December 7, 2021
By: Emily Flitter
Saule Omarova, a Cornell Law School professor whom critics painted as a communist after President Biden picked her for a key banking regulator job, withdrew from consideration for the post on Tuesday.
In a letter to the White House, Ms. Omarova said it was “no longer tenable” for her to seek the position of comptroller of the currency. Mr. Biden, who said Ms. Omarova had “lived the American dream” by escaping her birthplace in the former Soviet Union and serving the United States, accepted her request.
“Saule would have brought invaluable insight and perspective to our important work on behalf of the American people,” he said in a statement. “But unfortunately, from the very beginning of her nomination, Saule was subjected to inappropriate personal attacks that were far beyond the pale.”
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It was not immediately clear whom Mr. Biden will turn to next to lead the Office of the Comptroller of the Currency, the agency that regulates the country’s largest banks. Two of the early front-runners for the nomination lost out in an internecine battle between moderate and progressive Democrats. The O.C.C. has been without a confirmed leader since Joseph M. Otting, former President Donald J. Trump’s choice for the role, stepped down in May 2020.
Ms. Omarova faced months of criticism from Republicans and bank lobbyists who cast her as a threat to the American economy. Lobbyists began to oppose her almost as soon as her nomination was announced, saying she wanted to replace the banking industry’s functions with services provided by the Federal Reserve.
They pointed to a 2020 paper that Ms. Omarova had written about ways the Fed could use its own digital currency, which central bankers had already begun to consider creating. (As comptroller, Ms. Omarova would have had to coordinate with bank regulators at the Federal Reserve but would not have had the authority to make changes to the banking system’s structure.)
Some lobbyists, including the incoming chairman of a group representing community bankers and the chief executive of another group that focuses on big banks, also shared a Wall Street Journal editorial suggesting that Ms. Omarova’s Soviet childhood meant that she could not be trusted.
A spokesman for the American Bankers Association, the biggest bank trade group, declined to comment. The Consumer Bankers Association, another major trade group, did not respond to requests for comment.
Rebeca Romero Rainey, the president of the Independent Community Bankers of America, said Ms. Omarova’s withdrawal demonstrated the importance of community banks, because the group had been at the forefront of the opposition. She said the group would “continue standing up for community banks and the communities they serve” by ensuring that regulatory nominees support the association’s objectives.
Republicans in Congress mimicked the lobbyists’ criticisms, saying Ms. Omarova’s academic work and her Soviet origins should disqualify her. In an exchange that drew gasps from Democrats during Ms. Omarova’s hearing before the Senate Banking Committee on Nov. 18, Senator John Kennedy, Republican of Louisiana, demanded to know whether Ms. Omarova had ever resigned from a communist youth group that Soviet children were forced to join, adding, “I don’t know whether to call you ‘professor’ or ‘comrade.’”
But Republican opposition would not have mattered had Senate Democrats been united in favor of Ms. Omarova. Her nomination was ultimately doomed by a lack of support from moderates, making her the Biden administration’s third high-profile nominee to bow out after failing to receive the full backing of Democratic lawmakers. The White House also pulled Mr. Biden’s first choices to lead the Office of Management and Budget and the Bureau of Alcohol, Tobacco, Firearms and Explosives.
At Ms. Omarova’s confirmation hearing, Senators Jon Tester of Montana and Mark Warner of Virginia, both Democrats, said they had serious concerns about her candidacy, although neither suggested she intended to subvert capitalism. Instead, they condemned her for having opposed legislation they both supported to roll back parts of the regulations put in place by the Dodd-Frank Act in the wake of the 2008 financial crisis.
Senator Sherrod Brown of Ohio, the Democrat who leads the Banking Committee, said in a statement on Tuesday that he was disappointed by the outcome.
“Dr. Omarova is one of the most qualified nominees ever for this job because of her experience as a policymaker, in the private sector, and in academia,” he said.
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