ICBA takes unusual step of opposing OCC nominee

WASHINGTON — A top trade association representing community banks urged U.S. lawmakers to oppose the nomination of Saule Omarova for comptroller of the currency, an unusual rebuke coming just hours before the Senate hears the law professor’s testimony.

In a letter sent by the Independent Community Bankers of America and addressed to the leadership of the Senate Banking Committee, the group called Omarova’s scholarship and policy positions “alarming.”

"The Independent Community Bankers of America and the undersigned state banking associations, representing thousands of community banks and the communities they serve write to express our opposition to the nomination of Professor Saule Omarova to be the Comptroller of the Currency," the group said.

The industry has specifically called out a proposal by Omarova to shift all customer deposits to accounts held at the Federal Reserve.

“The Comptroller should have a fundamental understanding of the role that community banks play in supporting local economic growth,” the ICBA said in the letter. It was undersigned by 40 state-level community bank trade groups. “Professor Omarova has advocated the displacement of community banks with government credit allocation.”

Public opposition to a regulatory nominee from industry advocates is highly unusual, even with the polarization between political parties. The ICBA’s letter noted that the group has “not previously opposed a nominee of this President and have only rarely opposed a nominee of any previous President.”

Omarova, who is scheduled to testify before the Senate Banking Committee Thursday morning, has received harsh criticism from industry and Republicans since her nomination was first announced in September to lead the Office of the Comptroller of the Currency.

Critics have taken aim at some proposals in her scholarship that would significantly restructure the financial system. Her idea to shift deposits to the Fed came in a 2020 paper in which she described a public banking construct known as “The People’s Ledger.”

“Professor Omarova has advocated for government allocation of capital and credit through the transfer of private retail banking functions to the Federal Reserve, ‘fully replacing’ private bank deposits as a funding source,” the ICBA letter said, in reference to the paper.

Supporters of Omarova have rallied to her defense in recent days, charging that her critics are using personal attacks to undermine her candidacy, including allegations of Marxism tied to her experience growing up in the former Soviet Union and attending Moscow State University as an undergraduate.

Omarova’s opening remarks for Thursday’s hearing were published by the Senate Banking Committee Wednesday afternoon. In that prepared testimony, the Cornell University professor wrote that if she were confirmed, her “top priority will be to guarantee a fair and competitive market where small and mid-size banks that invest in their neighbors’ homes and small businesses can thrive.”