Toomey: I’ve Never Seen a Nominee with More Radical Ideas
“Her ideas amount to a socialist manifesto for American financial services”
Washington, D.C. – In his opening statement at today’s U.S. Senate Banking Committee hearing, Ranking Member Pat Toomey (R-Pa.) highlighted Professor Saule Omarova’s, President Biden’s nominee for Comptroller of the Currency, long history of promoting ideas that she herself describes as “radical.” Among these ideas are her proposals to “effectively ‘end banking’ as we know it,” turn community banks into “franchisees” of the Fed, channel credit to what she deems “productive uses in the nation’s economy,” and allow the Fed to set prices for items such as food, wages, and energy.
Ranking
Member Toomey’s remarks, as prepared for delivery:
Thank
you, Mr. Chairman.
I’ve
read a variety of Prof. Omarova’s writings and watched videos of her speaking.
I have no doubt that she’s an intelligent, knowledgeable, and experienced law
professor.
My
concern with Prof. Omarova is her long history of promoting ideas that she
herself describes as “radical.” I agree that they are radical. But I’d also
describe them as socialist. In fact, I’ve never seen a more radical nominee to
be a federal regulator.
Let’s
talk about some of Prof. Omarova’s radical ideas. For starters, she wants to
“effectively ‘end banking’ as we know it.” What does that mean? Well, she’s
told us.
In
“The People’s Ledger,” a paper she published just last month, she outlined her
plan for nationalizing retail banking. Under her plan, “central bank accounts
fully replace—rather than uneasily co-exist with—private bank deposits.”
In
other words, you couldn’t have an account with your local community bank. Your
money would be held by the government at the Federal Reserve.
Countless
Americans were outraged over recent Democrat plans for the IRS to get their
personal bank account information. Imagine their reaction to having the
government actually take over their bank accounts.
Prof.
Omarova also has a proposal to control the money supply through these
individual FedAccounts, including when necessary “implementing a contractionary
monetary policy by debiting” those accounts. For those of us who are not
accountants, debiting means subtracting.
This,
she allows, could be “perceived as the government ‘taking away’ people’s
money.” I think I know why—because it is the government taking away people’s
money.
Prof.
Omarova’s plan would devastate all banks, but especially community ones that
rely on deposit-taking for lending money to local businesses and residents.
What would happen to these banks under Prof. Omarova’s plan to outlaw their
business model?
According
to “The People’s Ledger,” Prof. Omarova might allow these community banks to
continue to exist but only as “franchisees” for the government, if they qualify
for a license to “operate physical branches and ATMs on the Fed’s behalf.” I
see.
Except
that Prof. Omarova would deny these banks their source of funding—deposits. And
without a source of funding, banks can’t lend to a woman opening a new
restaurant in town, a tool and die shop looking to expand, or newlyweds buying
their first home, or anything else.
Given
that she wants community banks to become vassals of the government, it’s no
wonder the Independent Community Bankers of America and banking associations
from 41 states so far oppose her nomination.
As
Ricky Leal, Senior Vice President at First Community Bank in Texas stated: “The
entire theory in banking, especially local community banking, is based on
gathering up deposits from the local community and loaning back out into the
local community so that those dollars are cycled through and stay local. . . .
You’d lose all that. A world without the local deposit, it would change banking
as we know it.” But, of course, that’s the idea.
Prof.
Omarova says in “The People’s Ledger” that one reason she wants the Fed to
become everyone’s bank is to “maximize its capacity to channel credit to
productive uses in the nation’s economy.” It’s troubling to ponder how she—or
anyone in the government—would define productive uses in our economy.
How
about loans to oil, gas, and coal companies—would Prof. Omarova consider them
productive? Well, we actually know the answer.
Earlier
this year, at a Social Wealth Seminar she said publicly of these energy
businesses: “We want them to go bankrupt if we want to tackle climate change.”
She
also said at an Investment and Decarbonization seminar this year:“the way we
basically get rid of those carbon financers is we starve them of their source
of capital.”
And
she’s created an entire blueprint for how the government could do this and she
has advocated her plan in testimony to Congress.
The
last thing we need now—with some Americans paying $5 a gallon for gas and home
heating costs soaring due to the Biden administration’s disastrous energy
policies—is a banking regulator who wants to push perfectly legal, and
economically necessary, companies that employ millions of Americans into
bankruptcy.
Prof.
Omarova’s radical ideas don’t stop there. She has a plan for the government,
through the Fed, to replace the free market in setting what she calls
“systemically important prices” for things like food, wages, and energy. And
since the administration’s done a great job on inflation, I’m sure Americans
can’t wait until the Fed starts directly controlling prices for eggs, milk, and
rent, too.
This
isn’t the only time Prof. Omarova has expressed support for government controls
on wages. As she tweeted in 2019: “Say what you will about old USSR, there was
no gender pay gap there. Market doesn’t always ‘know best’.”
I
suspect Prof. Omarova may claim that as Comptroller she wouldn’t have the power
to act on all of her radical views. But the truth is the Comptroller is a
powerful regulator.
It
wields enormous powers through bank chartering, regulation, enforcement, and,
especially through its opaque supervision process. The Comptroller is also a
member of the FDIC Board and the Financial Stability Oversight Council,
America’s financial super-regulator.
Prof.
Omarova may also claim her writings are just thought experiments. But for the
last decade, she’s been a consistent, forceful advocate for these radical ideas
in her writings, public statements, and in testimony before Congress.
Taken
in their totality, her ideas amount to a socialist manifesto for American
financial services: nationalizing the banking system, putting in price
controls, and creating a command-and-control economy where the government
allocates resources instead of free men and women making their own decisions
about the goods and services they want to buy and sell in an open market.
These
are exactly the kind of socialist ideas that have failed everywhere in the
world they’ve been tried. In my view, Prof. Omarova’s policy views are too
radical, and preserving the prosperity that our free market economy makes
possible is too important, to make her our nation’s top banking regulator.
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