Crapo Opposes Nomination of Saule Omarova to Lead Office of the Comptroller of the Currency
Washington, D.C.--As a senior member and former Chairman of the Senate Banking Committee, U.S. Senator Mike Crapo (R-Idaho) today raised serious concerns with Professor Saule Omarova’s nomination to lead the Office of the Comptroller of the Currency (OCC). He reiterated his strong and longstanding opposition to the Obama Administration’s Operation Choke Point, which sought to pressure banks to “choke off” politically disfavored industries’ (such as firearms) access to payment systems and banking services.
Omarova’s proposed ‘People’s Ledger’ would, “Make community banks almost wholly dependent on the Federal Reserve for funding through the discount window. This funding would be contingent on the extension of ‘qualified’ loans in accordance with specified underwriting and other eligibility criteria,” said Senator Crapo. “This could easily lead to the politicization of credit allocation, which is what I understand you advocate. This proposal is an anathema to community banks and our free market system. The core mission of community banks is support for small businesses and their households based on their knowledge and their borrowers and their communities.”
“[Operation Choke Point] is an incredibly dangerous concept to be building into our system.”
To view Senator Crapo’s entire statement and question-and-answer exchange with Professor Omarova, click HERE or the image above.
Senator Crapo’s full statement and questions are below.
“You have advocated for policies that would remake our entire financial system, such as advocating for government allocation of capital and credit through transfer of banking functions to the Federal Reserve, ‘fully replacing’ private bank deposits and, in your own words, support policies that would ‘effectively ‘end banking’ as we know it.’ It’s not surprising the Independent Community Bankers of America have urged opposition to your nomination. Under your ‘People’s Ledger’ proposal, community banks would be relegated to serving as representatives offices of the Federal Reserve.
“Today, they fund their balance sheets and lending operations primarily through FDIC-insured deposits. The People’s Ledger would make community banks almost wholly dependent on the Federal Reserve for funding through the discount window. This funding would be contingent on the extension of ‘qualified’ loans in accordance with specified underwriting and other eligibility criteria. This could easily lead to the politicization of credit allocation, which is what I understand you advocate. This proposal is an anathema to community banks and our free market system. The core mission of community banks is support for small businesses and their households based on their knowledge and their borrowers and their communities.
“As recently as March 2021, you said, ‘we want [these industries] to go bankrupt if we want to tackle climate change.’ Today, you said you didn’t mean that phrase, but later, in May of the same year, you proceeded to call for the de-banking of these industries, saying, ‘The way we basically get rid of these carbon financers is we starve them of their source of capital.’ Furthermore, you have proposed allowing the government to block credit to what you’ve called, ‘socially suboptimal industries.’ From your writings, we know that includes the carbon industry. I take great issue with these statements. I don’t believe we should be encouraging financial institutions to bankrupt industries for political purposes.
“The idea of controlling the allocation of capital is not new. Under a recent Administration, we had Operation Choke Point, which sought to do exactly this. This time, one of their targets was the firearms industry. They were targeted by the federal government and regulators and restricted in their ability to access banking services. Operation Choke Point was real and it exceeded its legal limits.”
- Professor, given your statements, how can we be confident you won’t pursue such radical actions as the head of the OCC and seek to starve legal and lawful industries of capital simply because they are viewed as politically unfavorable?
- You just highlighted the point I made. You just suggested you can’t achieve your objectives without Congress’s approval. But under Operation Choke Point, there is power that was used--without Congress’s permission--to allocate capital. I have great concern.
- Do you believe the firearm industry is a “socially suboptimal industry?”
- That was exactly the argument made under Operation Choke Point. That we can evaluate the risk of these socially suboptimal industries and, through our supervisory power, drive them out of their source of capital. That is an incredibly dangerous concept to be building into our system.
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