If you believe that President Joe Biden made some eccentric choices for his administration, you are not wrong. Amid a pandemic, he chose Xavier Becerra, who has no public health experience, as his secretary of Health and Human Services. He tried to install a Twitter troll as his budget director and an anti-gun fanatic as his ATF director — both were rejected.
Now, with Cornell University Professor Saule Omarova, Biden has nominated an economic regulator who praises the Soviet tyranny for its gender-neutral wage controls and “generous maternity benefits.”
Despite having grown up under Soviet communism, Omarova seems rather nostalgic for the USSR, which she made the (perhaps unwise?) decision to leave and move here in 1991. As comptroller of the currency, Omarova would play a large role in regulating U.S. banks. So, it kind of matters that she wants to replace them with government banking.
In a recent paper, Omarova suggested making the Federal Reserve, a quasi-government institution, the nation’s retail banker. As in, “Thanks for banking with the Fed! Here’s your toaster!”
Omarova presents this as a way of, among other things, “ensuring universal access to banking services.” But this universal access already exists. The unbanked choose to live as they do. Neither the Fed nor the Postal Service (as some Democrats keep foolishly recommending) can bring banking to people who would rather hide their cash in mattresses.
Omarova writes she wants to make the Fed “the ultimate public platform for generating, modulating, and allocating financial resources in a democratic economy.”
For all the problems the U.S. banking system actually has, greater centralization, government control, and “democratization” — really just another word for government control of private money — are not the answer.
In its letter opposing Omarova, the U.S. Chamber of Commerce offered up this wry understatement: “We believe someone who holds the expressed desire to ‘effectively end banking as we know it’ should not serve as a primary regulator of this industry.” No kidding.
In case you are entertaining the notion that Omarova is really a subtle thinker merely being taken out of context, consider that, in the paper making this recommendation, she actually attributes this year’s “Reddit-fueled GameStop rally” and the rise of Bitcoin to “the broader quest for more equitable and inclusive modes of finance.”
Sorry, but no — those things are not “equitable” or “inclusive” at all.
Like all other endeavors in a market economy, these phenomena resulted from private economic actors’ quest to make a profit by taking risks that defy common wisdom.
The idea that the Fed can “allocate financial resources” better than the economy is a foolish one. One need only watch the Fed’s current failure to run in Biden-era inflation. This indicates an institution already straining under the subtly crushing weight of political pressure — an institution that hardly needs additional responsibility.
Biden’s choice of someone with such weird ideas as comptroller of the currency is genuinely baffling, even in an administration that has made several appalling personnel and policy choices to date.
The Senate should insist Biden choose a banking regulator who believes in banks — someone from the mainstream of economic thinking who will regulate banks rather than attempt to rethink them entirely based on the conceits of central planning.
