Saule Omarova

© Image Copyright : Photo from Wikimedia Commons / Author of Photo: Senate Banking Committee / Source of Photo: https://www.banking.senate.gov/newsroom/photo-gallery/fintech-examining-digitization-data-and-technology

Saule Tarikhovna Omarova was born in 1966 in the West Kazakhstan Region of the Kazakh Soviet Socialist Republic. She was raised by her mother, who was a medical doctor, and her grandmother, who had been orphaned in the 1920s when Russian dictator Joseph Stalin sent her entire family to perish in Siberia.

In her youth, Saule Omarova belonged to an organization called The Leninist Communist Young Union of the Russian Federation, commonly referred to as The Young Communists, and she attended Moscow State University (MSU) on a Lenin Personal Academic Scholarship. At that time in the USSR, the ruling Communist Party awarded such scholarships mostly on the basis of fidelity to Marxist-Leninist doctrine, rather than academic merit. During her time at MSU, Omarova wrote a thesis titled “Karl Marx‘s Economic Analysis and the Theory of Revolution in The Capital.”

Omarova graduated from MSU in 1989 and then relocated to the United States two years later. In a May 9, 2020 interview with Chris Hayes of NBC, she explained the circumstances of her move to America: “I was an undergraduate student at Moscow State University and there was at the very end of the Gorbachev era an exchange program between Moscow State and University of Wisconsin Madison. I got lucky against all odds, and I came for that one semester in 1991 to Madison, Wisconsin. While I was there in December of 1991, the Soviet Union fell apart. So there I was, a student without anywhere to go back. I was very worried about what was going to happen. So I stayed to do my Ph.D. in political science, but frankly, I’m just, to this day, I feel guilty for having left the country at such a momentous time, because obviously they couldn’t hold it together without me.”

While she was a doctoral student in May 1995, Omarova was arrested in Madison, Wisconsin, when she was caught trying to steal $214 worth of merchandise at a T.J. Maxx store. A police report about the incident stated that Omarova “admitted to have stolen the items.”

Omarova subsequently went on to earn a Ph.D. in political science from the University of Wisconsin–Madison, and a Juris Doctor from the Northwestern University Pritzker School of Law.

During the George W. Bush Administration in 2006-07, Omarova served in the Department of the Treasury as a Special Advisor on Regulatory Policy to the Under Secretary for Domestic Finance.

After practicing law for six years in the Financial Institutions Group of the New York-based legal firm Davis Polk & Wardwell, Omarova became a Professor at Cornell Law School in July 2014, focusing on financial regulation, banking law, and international and corporate finance.

In 2016, Omarova co-authored a paper titled “Systemically Significant Prices,” which called for the federal government to unilaterally control all wages as well as the prices of fuel, food, raw materials, metals, natural resources, and homes.

Sometime in 2017, Omarova scrubbed any reference to her college thesis on Karl Marx from the version of her curriculum vitae (CV) that appeared on the Cornell Law School website.

In a 2017 paper, Omarova advocated in favor of the “golden share” concept of having government officials serve on bank boards under certain conditions. Explaining that such officials could act as “insider[s]” tasked with helping to “counteract socially harmful” actions by their respective institutions, she predicted that her idea would be widely criticized as “too radical, unworkable, or even dangerous.”

In 2019, Omarova compared the United States unfavorably to the old Soviet Union in terms of women’s rights. “Until I came to the US,” she tweeted, “I couldn’t imagine that things like gender pay gap still existed in today’s world. Say what you will about old USSR, there was no gender pay gap there. Market doesn’t always ‘know best.’” After a number of conservatives criticized Omarova for that tweet, she wrote in reply: “I never claimed women and men were treated absolutely equally in every facet of Soviet life. But people’s salaries were set (by the state) in a gender-blind manner. And all women got very generous maternity benefits. Both things are still a pipe dream in our [American] society!”

In 2019 as well, Omarova joined a Marxist Facebook group where socialist and anti-capitalist views were freely discussed.

In a Canadian documentary titled Assholes: A Theory, which was released that same year, Omarova called the financial services industry “a quintessential asshole industry.”

Disparaging the “dysfunctional financial system we already have,” Omarova wishes to put an “end to banking” as we have known it, and to transfer all private banking functions to the Federal Reserve. This would effectively make the Fed the nation’s only bank – a place where federal accounts would “fully replace” private bank accounts. “The core idea here is simply to allow all U.S. citizens and lawful residents, local governments, non-banking firms and non-business entities to open transactional accounts directly with the Federal Reserve,” Omarova has written, “thus bypassing private depository institutions. In this sense, it is a variation on the familiar FedAccounts — or FedCoin, ‘digital dollar wallets,’ etc. — theme. In principle, FedAccounts can be made available as an alternative to bank deposit accounts, upon a person’s request.”

Omarova noted in writing that her proposal to allow the federal government to control everyone’s money, and to turn private banks into nothing more than “non-depository lenders,”  was “deliberately radical in scope and substance.” As Kristin Tate wrote for The Hill: “Taken to its extreme, this [proposal] would mean that the Federal Reserve, acting on behalf of Washington, could become the only place citizens could deposit their money. Such a massive transformation would be accomplished by replacing consumer deposits into a new digital dollar, held by the Fed.”

Omarova has called for the imposition of a “series of structural reforms” to the Federal Reserve, reforms “that would radically redefine the role of a central bank as the ultimate public platform for generating, modulating, and allocating financial resources in a democratic economy—the People’s Ledger.” She envisions “the complete migration of demand deposit accounts to the Fed’s balance sheet,” and advocates a “comprehensive qualitative restructuring of the Fed’s investment portfolio, which would maximize its capacity to channel credit to productive uses in the nation’s economy.” While such a policy fails to define specifically who would be entrusted with deciding what constitutes “productive uses” of resources, Omarova is confident that her proposed reforms “would make the financial system less complex, more stable, and more efficient in serving the long-term needs of the American people.”

In her 2020 paper, “The People’s Ledger: How to Democratize Money and Finance the Economy,” Omarova sets forth a vision of “how democratizing access to central bank money would—and should—transform and democratize the entire financial system.” The paper offers a “blueprint for a comprehensive restructuring of the central bank balance sheet as the basis for redesigning the core architecture of modern finance.”

In a talk she delivered at a Law and Political Economy Project (LPEP) conference on January 28, 2021, Omarova said: “[T]here will be no more private bank deposit accounts, and all of the deposit accounts will be held directly at the Fed. And there are very interesting implications from that thought experiment, for example, with the much more direct and proactive tools of monetary policy, like helicopter money, which is, you know, considered radical, primarily because economists really do not know how to manage the issue of what would happen in the inflationary environment when the central bank needs to contract the supply of money. How is it politically feasible for the central bank to effectively take money away from people’s accounts?”

In a paper accompanying her remarks at the LPEP event, Omarova wrote that the “familiar tools of monetary policy and financial regulation” were becoming “increasingly obsolete and ineffectual,” and she claimed that policymakers now had “a unique opportunity to correct the inequities and inefficiencies built into the core structures of modern finance.” Putting it yet another way, she wrote that “the current convergence of deep technological, economic, and political shifts creates a crucial opening for redesigning the financial system” (emphasis in original).

This transformation of America’s financial system ought to be achieved quickly, Omarova added, explaining that “the need for this fundamental restructuring is particularly urgent in light of the recent COVID-19 experience,” when “the pandemic made not having a basic bank account an existential threat to millions of poor, disproportionately non-white Americans.” “In a visceral way,” said Omarova, “the pandemic exposed the ultimate human costs of crisis-time malfunctions—and hard-wired dysfunctions—in the financial system.”

Consequently, Omarova elaborated, “containing the COVID crisis … quickly became a matter not only of public health but also of financial inclusion, economic justice, and racial equity. Yet, the federal government’s response followed the old playbook of saving the economy by propping up financial markets, with predictably inequitable results.” “In effect,” she said, “the pandemic laid bare the fundamental asymmetry in the operation of the U.S. fiscal and monetary infrastructure, designed to privilege financial institutions and their corporate clients over ordinary Americans.”

Norbert Michel, director of the Cato Institute’s Center for Monetary and Financial Alternatives, says that under Omarova’s plan for the restructuring of the American financial system, “the private sector could not compete with the federal government.” “[P]rivate banks would not be able to provide better interest rates to customers and charge lower rates to make loans,” Michel explains. “It would be a matter of policy that decided private banks’ fate.”

In a March 2021 interview which was part of the Jain Family Institute’s Social Wealth Seminar series, Omarova, while discussing “troubled industries and firms that are in transitioning,” bluntly declared that the destruction of the oil, gas, and coal industries would be essential for the protection of the natural environment. “And here what I’m thinking about is primarily coal industry and oil and gas industry,” she said. “A lot of the smaller players in that industry are, uh, going to probably, uh, go bankrupt in, in, in short order, at least we want them to go bankrupt if we want to tackle climate change, right?” On another occasion, Omarova put it this way: “In order to prevent climate change, we have to bankrupt all the coal, oil, and gas companies.”

In May 2021, Omarova was named a Senior Berggruen Fellow at the Berggruen Institute, a Los Angeles-based think tank which believes that both capitalism and democracy are “faltering” institutions in need of “great transformations.”

In September 2021, President Joe Biden nominated Omarova for Comptroller of the Currency, a position that would make her the chief regulator for all federally licensed banks, credit unions, and foreign banks operating in the United States. As the Cato Institute’s Norbert Michel explains, the Comptroller “has enormous discretion to direct banking activity through examination and enforcement actions, including which types of customers banks lend to.”

Following Omarova’s nomination for Comptroller, numerous Republicans expressed concern vis-a vis what they viewed as her radical ideas and positions. In an October 2021 interview with the Financial Times, Omarova portrayed her critics as racists and sexists. “There is definitely a different standard applied to someone like me,” she said. “I am an easy target. An immigrant, a woman, a minority. I don’t look like your typical Comptroller of the Currency. I have a different history. I am easy to demonize and vilify.”

One Republican who was uneasy with Omarova’s nomination was U.S. Senate Banking Committee Ranking Member Pat Toomey, who asked her on October 6, 2021 to provide the Committee, by October 13, with a copy of the college thesis she had written on Marx. But Omarova never produced the document, explaining that it was no longer in her possession. “It simply did not even occur to me to look up some typewritten version of some mandatorily assigned paper,” she said at her Senate confirmation hearing on November 18, 2021. “So I didn’t bring it with me [when emigrating to the U.S. in 1991]. It did not reflect my views then; it does not reflect my views now.”[1] Explaining that she had had very little academic freedom during her time as an undergraduate at Moscow State University, Omarova added: “I’m not a communist. I do not subscribe to that ideology. I could not choose where I was born.”

On November 24, 2021, Axios.com reported: “Five Democratic senators have told the White House they won’t support Saule Omarova to head the Office of the Comptroller of the Currency, effectively killing her nomination for the powerful bank-regulator position. […] In [a] phone call [that day], Sens. Jon Tester (D-Montana), Mark Warner (D-Virginia) and Kyrsten Sinema (D-Arizona), all members of the Senate Banking Committee, told Sen. Sherrod Brown (D-Ohio) — the panel’s chairman — of their opposition. They’re joined in opposing [Omarova] by Sens. John Hickenlooper (D-Colorado) and Mark Kelly (D-Arizona).

Footnotes

  1. Omarova once explained how she had come to write her college paper on Marx: “We were assigned mandatory topics, and I got assigned something about Karl Marx, economic theory, I don’t even remember. Nobody took it seriously; it was not meant to be an actual academic exercise. All you had to do was basically copy from whatever the textbook said, and that was that. So I wrote that paper, got my degree. Literally the next day, I forgot about it, just like every other graduate in my class forgot about their papers.” She did not explain, however, why she had scrubbed it from her résumé.

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