Comment: Misguided appointment would be bad news for Michigan community banks

The United States Office of the Comptroller of the Currency is an independent office of the United States Department of the Treasury, whose mission is to ensure that national banks and federal savings associations operate in a safe and sound manner, providing fair access to financial services, treat clients fairly and comply with applicable laws and regulations.

In essence, the OCC provides critical oversight that ensures Americans are treated fairly by banks and their deposits are protected.

Sadly, President Joe Biden’s controversial choice to head this important post, Cornell University law professor Saule Omarova, would radically transform the regulatory landscape for government oversight of U.S. banking institutions.

If confirmed, Omarova, who in the past has gone so far as to suggest letting the Federal Reserve take over the deposit accounts of all Americans, would effectively eliminate the community banking model that provided the United States with the the most competitive and diversified banking system in the world. the world.

As recently as last year, Omarova said that “Allowing private banks to continue to accept deposits in competition with the central bank potentially creates significant problems from the point of view of systemic stability.” This misguided proposal, if passed, would essentially nationalize and displace local community banks that have thrived with the best interests of our communities at heart. For decades, local banks have served as a cornerstone for thousands of small businesses, providing the capital necessary to foster the economic growth and long-term prosperity of local communities in the Great Lakes State.

Community banks also provide local populations with vital credit in their communities. Increased regulation of the big Wall Street banks has also been applied to community banks and has already hampered local banking networks in favor of Wall Street banks. Omarova’s position is a way to swallow up the rest. With all the decisions made in high towers in New York and Washington, DC, based on algorithms, the result will be that “staff” will be cut out of personal banking.

Unfortunately, it does not end there. Under Omarova, the OCC would also implement even more restrictive government control over our country’s financial institutions. In a legal research paper, released in February last year, Omarova expressed that she would like a government bureaucrat to sit in every systemically important bank, bank holding company, and financial technology (fintech) company. in the United States, stating that it might It makes sense to “mandate direct government participation – the ‘gold share’ – in these entities.” This misguided tactic would transform these vital infrastructures into public-private enterprises, ultimately slowing down innovation and leaving direct management to the government.

In addition, Omarova wants to establish a government-run national investment authority, which would exercise even more direct control over the national economy. “To spend more money on conventionally unprofitable or unproven infrastructure, the public must actively create ‘market opportunities’ by exercising more direct control over the allocation of capital. It’s not just about spending, it’s about managing. This sweeping proposal would bind us, for all intents and purposes, hands behind our backs, instead of promoting the very innovation in research and development that has enabled our nation to lead the world in technological and financial ingenuity. .

President Biden has won back independent voters here in Michigan by campaigning as a moderate voice of reason able to navigate today’s highly polarized political landscape. Yet her appointment of Omarova and her proposals are already garnering praise from far-left lawmakers in Washington, including Senator Elizabeth Warren. D-Mass. This should come as no surprise, however, given that Omarova has already publicly endorsed the Green New Deal of Sen. Bernie Sanders (I-Vt.) And Representative Alexandria Ocasio Cortez (DN.Y.).

US Senator Gary Peters has become known for his sensible, bipartisan approach, both in Lansing and on Capitol Hill. So when it comes to preserving the future of community banks and economic growth here in Michigan, I urge her and Senator Debbie Stabenow to put aside partisan politics and oppose the appointment of Saule Omarova to the office of the controller of the currency. , when it comes to a vote in the US Senate.

John Llewellyn served in the Michigan House of Representatives from 1993 to 1998 and was vice president of government relations for the Michigan Bankers Association.