The Fed should end banking as we know it
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Biden’s nominee to regulate banks really, really hates . . . banks.
Ms. Omarova thinks asset prices, pay scales, capital and credit should be dictated by the federal government. In two papers, she has advocated expanding the Federal Reserve’s mandate to include the price levels of “systemically important financial assets” as well as worker wages. As they like to say at the modern university, from each according to her ability to each according to her needs.
In a recent paper “The People’s Ledger,” she proposed that the Federal Reserve take over consumer bank deposits, “effectively ‘end banking,’ as we know it,” and become “the ultimate public platform for generating, modulating, and allocating financial resources in a modern economy.” She’d also like the U.S. to create a central bank digital currency—as Venezuela and China are doing—to “redesign our financial system & turn Fed’s balance sheet into a true ‘People’s Ledger,’” she tweeted this summer. What could possibly go wrong?
Ms. Omarova believes capital and credit should be directed by an unaccountable bureaucracy and intelligentsia. She has recommended a “National Investment Authority,” with members overseen by an advisory board of academics, to finance a “big and bold” climate agenda. Sounds like the green infrastructure bank the Senate rejected.
She’d also like a politically and structurally independent “Public Interest Council” of "highly paid” academics with broad subpoena power to supervise financial regulatory agencies, including the Fed. The Council, she explained, would not be subject to the “constraints and requirements of the administrative process.” Ivy League professors know best.
As comptroller, Ms. Omarova would supervise some 1,200 financial institutions. While she couldn’t enact her People’s Agenda without legislation, she would have sweeping powers to punish banks that don’t follow her diktats. Recall how financial regulators during the Obama Presidency pressured banks to cut off credit to pay-day lenders.
Our sources say the President nominated Ms. Omarova over the objections of Treasury Secretary Janet Yellen, to whom the comptroller reports. One theory for this bizarre nomination is that Mr. Biden is trying to appease progressives because he plans to reappoint Jerome Powell as Fed chairman. Democratic Senators have rubber-stamped all but a few of Mr. Biden’s nominees, but Ms. Omarova is the wrong nominee for the wrong industry in the wrong country in the wrong century.
