Public Banking vs. Open-Source Money: What Omarova for OCC Means

The controversial nominee to lead the national banking regulator has been a critic of this controversial industry.

CoinDesk Insights
Nov 18, 2021 at 8:48 p.m. UTC
Updated Nov 18, 2021 at 10:44 p.m. UTC

Daniel Kuhn is a reporter on CoinDesk's Features team. He owns BTC and ETH.

Brian Quintenz, former commodities regulator and friend to the crypto industry, weighed in today on the confirmation process to elect a new Comptroller of the Currency. Taking the stand today in a U.S. Senate hearing is Saule Omarova, a controversial pick for the seat due to her professed support for public banking and skepticism of some corners of private finance.

Over her brief academic career, Omarova published papers making the case for strengthening the Federal Reserve’s role in consumer banking, limiting the ability for private banks to feed into speculative frenzies (a la the 2008 derivatives crisis) and reining in the excesses of the fintech and crypto sectors.

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For this, she’s been called a “radical choice” by U.S. senators, talking heads and crypto thinkboys. (Some of this criticism is tinted xenophobic red; conspiracists like to point that Omarova won a Lenin Personal Academic Scholarship while studying philosophy at Moscow State University in 1989.)

“I think that anyone needs to be expected to answer for their record, to the extent that they have a record and to the extent that they put themselves out there publicly, espousing certain beliefs or discussing certain frameworks,” Quintenz said on CoinDesk TV’s “First Mover.”

Although some of her views fall well outside of mainstream opinion, Omarova does represent an increasingly common view among regulators that crypto needs to be brought under their yoke. A progressive, self-described lover of American capitalism, Omarova supports both a “digital dollar” central bank digital currency and publicly run banks. Crypto, it’s said, is a distraction.

In a recent interview, Omarova told New York magazine that her tough regulatory positions are meant to actually strengthen the banking sector, which “many Americans lost confidence in” following the 2008 financial crisis. These frustrations paved the way for innovators like fintech and crypto to step in.

“They should welcome reasonable, rational, good regulation because it actually helps all of them to do good and not be outcompeted by the bad guys,” she said. [emphasis added] “They should welcome a strong regulator who understands the industry and who can be a strong protector for the banking sector as well.”

The OCC, by its own estimates, oversees about 1,000 banks and institutions worth almost $15 trillion. This includes the three crypto firms granted national charters after former acting head Brian Brooks paved the way for that last year.

There are some concerns that a new crypto-skeptic OCC lead could overturn some of the positive advances Brooks made while in office. Last month Brooks told CoinDesk he thinks his legacy is secure – for instance, calling his stablecoin guidance “super-tightly lawyered.”

“Once people – especially in independent agencies – are confirmed to lead them, they have a lot of power to make decisions, using a lot of flexibility in the law, and can do so in a way that doesn’t necessarily provide a lot of accountability to Congress or the American people,” Quintenz said.

For her part, Omarova has noted that there’s a difference between exploring ideas in an academic setting and enacting them while leading a federal body. And even if it is doubtful that crypto and fintech could “revolutionize” finance, as she said in 2019, she does support the industry’s key values of privacy and data security. Not to mention her overall concern in improving financial access and curbing the predatory nature of banks.

Raúl Carrillo, an associate research scholar at Yale Law School, went as far as saying in a CoinDesk op-ed that Omarova could emerge as an unlikely ally to the crypto industry.

Either way, Omarova faces a tough road ahead: If even one Democrat decides to vote against her she’ll lose her nomination. Ellen Brown of the Public Banking Institute doesn’t think she’ll get confirmed.

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