Lawmakers clash over Treasury nominee’s Soviet background, anti-fossil fuel positions

Fireworks erupted on the Senate Banking, Housing and Urban Affairs Committee on Thursday over President Biden’s nominee to lead a top regulatory post in the Treasury Department, with Republicans challenging her worldview as a native of the Soviet Union and Democrats accusing Republicans of engaging in “Red Scare” tactics.

Saule Omarova, a Cornell University law professor nominated for comptroller of the currency, faces unified Republican opposition over past statements that she wanted the fossil fuel industry to go bankrupt to help tackle climate change and proposed to block credit to “suboptimal” industries such as arms dealers.

Her nomination is on shaky ground. Two Democrats, Sen. Mark R. Warner of Virginia and John Tester of Montana, expressed concerns about Ms. Omarova’s past objections to bipartisan banking legislation. She would be the first woman and first non-White to hold the post.

Sen. John Kennedy, Louisiana Republican, asked Ms. Omarova about growing up in the Soviet Union and whether she had ever resigned from a communist youth organization. She was born in Kazakhstan and graduated from Moscow State University in 1989.

Mr. Kennedy at one point said Ms. Omarova joined a Marxist Facebook group in 2019 “to discuss socialist and anti-capitalist views.”

“I don’t know whether to call you ‘professor’ or ‘comrade,’” Mr. Kennedy told her.

“Senator, I’m not a communist,” Ms. Omarova replied. “I do not subscribe to that ideology. I could not choose where I was born. I do not remember joining any Facebook group that subscribes to that ideology. I would never knowingly join any such group. There is no record of me ever actually participating in any Marxist or communist discussions of any kind. My family suffered under the communist regime.”

Most Democrats support Ms. Omarova and say Republicans have launched an unfair campaign against her.

Sen. Elizabeth Warren, Massachusetts Democrat, told the nominee that big banks and their Republican allies have “declared war on you.”

“The attacks on your nomination have been vicious and personal,” Ms. Warren said. “Sexism, racism, pages straight out of Joe McCarthy’s 1950s Red Scare tactics. … Welcome to Washington in 2021.”

Other Republicans challenged Ms. Omarova’s past positions on the banking industry. They said she essentially called for banks to be used as a lever to compel social change for left-wing initiatives. Sen. Tim Scott, South Carolina Republican, criticized Ms. Omarova for her “disdain of the financial services industry.”

“I cannot think of a nominee more poorly suited to be the comptroller of the currency,” he said.

Sen. Patrick J. Toomey, Pennsylvania Republican, said Ms. Omarova’s academic writings advocated a “dramatic expansion in the power and control of the central government to allocate resources to control banking, and a corresponding diminution in the freedom of individual Americans and institutions.” He called the nominee’s record a “socialist manifesto for American financial services.”

“The powers of the comptroller of the currency are enormous: powers to decide who gets to open a bank account, who doesn’t; what kind of loans can and can’t be offered,” Mr. Toomey said. “The opportunity to exercise a radical ideology through the powers of the comptroller of the currency are chilling.”

Republicans reminded Ms. Omarova about Operation Choke Point, an Obama-era Justice Department initiative that investigated banks doing business with firearms dealers, payday lenders and other industries that the federal government classified as high risk for fraud and money laundering.

The program ended in 2017, and Republicans expressed concern that the Treasury nominee might try to revive the Justice Department initiative.

“I just have a great concern. Do you believe that the firearms industry is a socially suboptimal industry?” asked Sen. Mike Crapo, Idaho Republican.

Ms. Omarova responded, “Senator, I do not think much of firearm industries. I believe that if I’m confirmed as the comptroller of the currency, my job will be simply to make sure that all national banks are safe and sound and they take into account all the risk factors when they decide to lend to one business or another business.” She said any decision on the firearms industry would not be up to her.

The hearing became heated when Mr. Kennedy asked about Ms. Omarova’s early years in the Soviet Union and asked whether she was a member of the Young Communists.

“Senator, I was born and grew up in the Soviet Union,” she said. “Everybody in that country was a member of the Komsomol, which was the communist youth organization, because that was the normal progress at school.”

Mr. Kennedy asked whether she resigned from the Komsomol. Ms. Omarova responded that membership stops automatically at a certain age. Sen. Sherrod Brown, Ohio Democrat and chairman of the committee, became irritated when Mr. Kennedy asked for a letter of resignation.
“I don’t interrupt. I almost never interrupt these,” Mr. Brown told Mr. Kennedy.

“But you always interrupt me, Mr. Chairman,” Mr. Kennedy shot back.

As the two lawmakers clashed over interruptions and Senate protocol, Mr. Brown chided his Republican colleague, “Sen. Kennedy, senatorial courtesy is also not doing character assassination.”

Mr. Kennedy replied, “Well, that’s your opinion, but I’m entitled to answers to questions without you interrupting me.”

Mr. Kennedy said later that Ms. Omarova can believe what she wants in the U.S., but “we can’t just let anybody be comptroller of the currency.”
“In 2020, you wrote another paper called ‘The Climate Case for a National Investment Authority,’ where you said, ‘What we need to do to the oil and gas industry is to have the federal government bankrupt it so we can tackle climate change,” Mr. Kennedy told her.

When Mr. Brown asked whether she wants to bankrupt oil and gas companies, Ms. Omarova replied, “No, senator, I do not. That was poor phrasing.”

Ms. Omarova must now earn the support of every moderate Democrat to advance her nomination to an evenly divided Senate. At least a few of these lawmakers, including Sens. Kyrsten Sinema of Arizona and Joe Manchin III of West Virginia, have not publicly pledged their support to the nominee.

Mr. Tester and Mr. Warner indicated that they took issue with Ms. Omarova’s opposition to the Economic Growth, Regulatory Relief and Consumer Protection Act, which they co-authored. The banking legislation was signed into law in 2018. Mr. Warner called Ms. Omarova’s positions “pretty disappointing.”

Correction: An earlier version of this article had an incorrect date for Ms. Omarova’s graduation from Moscow State University.