Dems erupt over GOP ‘McCarthyism’ as senators vet Biden bank watchdog pick

A Senate confirmation hearing for President Biden’s pick to lead the top banking regulator erupted Thursday into a fight over her youth in the former Soviet Union and its relevance to her nomination.

During a Thursday hearing on Saule Omarova’s nomination to lead the Office of the Comptroller of the Currency (OCC), Democrats on the Senate Banking Committee blasted Republicans for raising questions about her loyalties to the U.S. and capitalism.

Omarova, a law professor at Cornell University, was born and raised in the former Soviet republic of Kazakhstan before emigrating to the U.S. While she has been a U.S. citizen since 2005 and served in the George W. Bush administration, Senate Republicans have pressured her to hand over a thesis on Karl Marx’s economic analysis she wrote as an undergraduate at Moscow State University nearly 40 years ago.

Sen. Pat Toomey (Pa.), the top Republican on the Banking panel, and his GOP colleagues insist that Omarova’s deletion of a reference to the thesis from her resume in 2017 raises questions about what she’s trying to hide. He also drew a direct connection to her more recent academic writing on how the federal government could create a “radical” new consumer banking system.

“She wants to nationalize the banking system, put in place price controls, create a command and control economy where the government allocates resources explicitly, 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,” he continued. 

“These are exactly the kind of socialist ideas that have failed everywhere in the world they’ve been tried.”

Omarova said she doesn’t have a copy of the thesis in question, which is written in Russian, and never brought it with her to the U.S.

Democrats say that the GOP interest in her undergraduate work is only meant to paint her as a communist sympathizer out of step with American values.

“They have a formula: Start with a passing and inaccurate reference to her academic work, distort the substance beyond recognition, mix in words like ‘Marx,’ and ‘Lenin,’ and ‘communism.’ End with insinuations about Professor Omarova’s loyalties to her chosen country,” said Banking Chairman Sherrod Brown (D-Ohio).

“Now we know what happens when Trumpism meets McCarthyism,” Brown continued. “It’s a cruelty no person should experience.”

Despite Thursday’s intense focus on Omarova’s early life, her nomination faces far greater threats from a more recent string of controversial proposals and statements that have evoked backlash from the banking industry. Omarova will likely need the support of all 50 Senate Democrats to overcome universal GOP opposition to be confirmed, and several moderate Democrats have already voiced reservations.

In a series of academic papers, Omarova has proposed ways the Federal Reserve could supplant major banks by offering consumer banking services and playing a greater role in capital allocation. While Omarova said those proposals were part of an academic debate over evolutions in the financial system, they nonetheless prompted the Independent Community Bankers of America to publicly oppose her nomination — a rare step for the powerful financial trade group. 

Omarova also took heat from Republicans and some moderate Democrats over her condemnation of major banks as an “asshole industry” and calls to push fossil fuel companies into bankruptcy — all of which she distanced herself from Thursday.

“My job will be simply to make sure that all national banks are safe and sound, and they take into account all the risk factors when they decide to lend to one business or another business. That’s not going to be up to me,” she said.

Sen. Jon Tester (Mont.), one of several moderate Democrats who’ve expressed concerns with her views, said her past comments were cause for alarm.

“Do you see how risky that is to make that statement?” Tester asked, noting Omarova’s potential power as the sole leader of the OCC.

“We have oversight, but you are a one-man shop. You see how dangerous that could be?”

As moderate Democrats homed in on Omarova’s record, some Republican senators sought to distance their concerns with her proposals from her life in the Soviet Union. Several condemned Democrats for raising accusations of McCarthyism and racism.

“I keep hearing my friends on the other side refer to personal attacks. One thing I can say and be very proud of on this committee from these Republicans: Not a single person has talked about anything other than your stated position as it relates to this nomination,” said Sen. Tim Scott (R-S.C.)

Shortly after Scott’s remarks, however, Sen. John Kennedy (R-La.) pressed Omarova if she ever resigned from a “Young Communists” group she was automatically enrolled in as a schoolchild. 

“I don’t know whether to call you ‘professor’ or ‘comrade,’ ” Kennedy said, drawing an immediate rebuke from Brown.

Omarova explained that she had little academic freedom or choice in the Soviet Union, particularly as an ethnic minority whose family was nearly wiped out by Joseph Stalin.

“I grew up without knowing half of my family. My grandmother herself escaped death twice under the Stalin regime,” Omarova said. “This is what seared in my mind. That’s who I am.”

After Brown and Kennedy scuffled over the chairman’s interruption and senatorial courtesy, Sen. Elizabeth Warren (D-Mass.) ripped Republicans for “a vicious smear campaign” waged on behalf of big banks.

“Wall Street feels threatened so they have launched an ugly personal assault on a respected person who never sought the spotlight,” said Warren, who has endorsed Omarova’s nomination.

“It is disgusting and anyone who participates in this malicious character assassination should be ashamed of themselves.”

Updated at 12:21 p.m.