A Victory for Banks?
This week, President Joe Biden announced that he had accepted Saule Omarova’s decision to withdraw her name as the nominee for Comptroller of the Currency, the chief regulatory agency for national banks. The Cornell University professor would have been the first woman and the first person of color to hold the position if the Senate had confirmed her — which seemed increasingly unlikely in recent weeks.
Omarova had been a controversial nominee, and that’s an understatement. She appeared in a 2019 Canadian documentary where she called banking the “quintessential a—hole industry,” according to published reports. She co-authored a 2021 paper titled “The People’s Ledger: How to Democratize Money and Finance the Economy,” where she proposed moving demand deposits out of banks to the Federal Reserve.
One could chalk up this episode to the fact that Democrats can’t seem to agree about whom they want in charge of banking agencies. And it’s difficult to get a nominee through the Senate, where the Democratic majority is razor thin.
Whatever you think of Omarova, I believe the administration’s year-long quest to fill major leadership roles on federal banking agencies is taking a toll on banks. The Federal Reserve is waiting for the White House to nominate three people for positions on the Fed’s Board of Governors. Randal Quarles’ term as vice chair of supervision, a critical role overseeing bank regulation, has ended. Gov. Richard Clarida’s term ends in January 2022. And a third nominee is needed to fill an empty governor’s seat.
These vacancies come as several bank acquisitions are on hold, pending regulatory approval. First Citizens BancShares has been waiting more than a year for the go-ahead on its application to buy CIT Group. First Citizens Chairman and CEO Frank Holding Jr. on a third quarter 2021 earnings call said he’s not aware of any problems with the application. His understanding is that the deal is pending approval at the Federal Reserve Board of Governors.
For close to a year, the banking industry has been in wait-and-see mode. Key leadership changes will determine the regulatory environment for years to come on everything from consumer regulation, fair lending, financial technology and other issues.
Banks hate uncertainty, but in this case, that’s exactly what they are getting.
• Naomi Snyder is editor-in-chief at Bank Director.
