Biden’s Nominee to Oversee National Banks Withdraws

Mr. Biden last month nominated Ms. Omarova, a Cornell University law professor, to be Comptroller of the Currency, which supervises many of the biggest U.S. lenders including JPMorgan Chase & Co. and Wells Fargo & Co.

Ms. Omarova’s earlier calls for shrinking big banks and creating a much bigger role for the Federal Reserve in consumer banking has drawn opposition from industry advocates and Republicans. They have said she envisions an overly large role for the government that they say would crimp business, even at community lenders, a powerful constituency that lobbied against her nomination.

A group of moderate Democrats privately voiced their opposition to Ms. Omarova in the days after a contentious nomination hearing in November, according to people familiar with the deliberations. Their opposition alone likely scuttled her chances of confirmation through the evenly divided Senate.

Montana Sen. Jon Tester, Arizona Sen. Kyrsten Sinema and Virginia Sen. Mark Warner—all centrist Democrats—conveyed their opposition to Senate Banking Committee Chairman Sherrod Brown (D., Ohio) on a telephone call about two weeks ago, The Wall Street Journal reported last month.

The conversation came after Messrs. Tester and Warner challenged Ms. Omarova at the Nov. 18 hearing over her past writing and thinking on banking oversight. Mr. Tester also pressed her at the hearing over remarks she made earlier this year calling for smaller oil-and-gas companies to go bankrupt to aid the U.S. in tackling climate change.

Ms. Omarova responded to Mr. Tester at the hearing by saying she misspoke and that her remarks weren’t well-framed. “My intention was…exactly the opposite,” she said. “We need to help those companies to get restructured.”

Ms. Omarova didn’t respond to an email on Tuesday seeking comment. In a brief withdrawal letter released by the White House, Ms. Omarova said, “it is no longer tenable for me to continue as a Presidential nominee.”

White House officials have defended Ms. Omarova but didn’t comment on Democratic opposition. Administration officials have said that Ms. Omarova, who was born in Kazakhstan when it was part of the Soviet Union, has been the target of “red baiting” from Republicans.

“As a strong advocate for consumers and a staunch defender of the safety and soundness of our financial system, Saule would have brought invaluable insight and perspective to our important work on behalf of the American people,” Mr. Biden said on Tuesday. “But unfortunately, from the very beginning of her nomination, Saule was subjected to inappropriate personal attacks that were far beyond the pale.”

Ms. Omarova’s defenders also include liberal-leaning Democrats such as Mr. Brown and Sen. Elizabeth Warren of Massachusetts. They have said she is an accomplished banking expert who will stand up to the industry. The senators say Washington regulators have been too deferential to big banks in recent years and that Ms. Omarova would work to make the financial system more inclusive for consumers.

The Office of the Comptroller of the Currency is an independent bureau of the Treasury Department. It oversees about 1,200 banks with total assets of $14 trillion, about two-thirds of the total in the U.S. banking system.

The White House has struggled to find a comptroller nominee who could win support from its Senate allies. Before nominating Ms. Omarova, the White House considered at least three other individuals for the role but never nominated them.

At present, the agency is run on an interim basis by Michael Hsu, a former Fed staffer. It has been without a Senate-confirmed head since May 2020.

Write to Andrew Ackerman at andrew.ackerman@wsj.com