A Marxist from the former Soviet Union is set to become America’s next Comptroller of the Currency. Saule Omarova graduated from Moscow State University in 1989 on the Lenin Personal Academic Scholarship, her thesis titled Karl Marx’s Economic Analysis and the Theory of Revolution in The Capital.
Having moved to America in 1991, she’d progressed through the ranks, with not many gasping over her very recent incendiary statements. Such as: discussing oil and gas companies at a Feb. 2021 seminar, she said, “We want them to go bankrupt if we want to tackle climate change, right?”
This is the person who is now facing the U.S. Senate Banking Committee hearings to confirm or deny her nomination for a job that controls what’s going to happen to everybody’s money in her chosen country.
Saule Omarova is the Cornell Law School professor who argues that all bank deposits should forcibly be transferred to FedAccounts at the Federal Reserve.
Should that happen, almost all American banks will go to hell.
People who dislike banks (charging huge fees, offering low interest rates, the complaints are too many to list) might say: so what?
Depends whence you’re watching.
The backbone of American banking rests in community banks. These depend on what is known in basic economics 101 as deposit funding. The less they get, the less they can do.
Take the funding away, and they’re gone.
Wall Street’s financial institutions have been a thorn in the left’s side since their inception. But: they can always go to the global bond market for funding. Yet, here’s what they’ll do in reality (it would be their only realistic option): they’ll close their bank arms. They used to be trading, private equity, and investment financial institutions. Nothing wrong with returning to their roots.
Omarova has been long proposing that the Fed change into America’s main source of credit.
If it doesn’t sound ominous, this is what it means: minus deposits, banks won’t be able to make loans to businesses and home buyers.
Balancing the risks and losses won’t be the criterion for the Fed’s decision whether you need (or deserve, even) a mortgage. This will be based on a bureaucratic ruling on whether such credit instruments serve a “public purpose.” Meaning: this is what the regulators want, and to heck with your, or the economy’s, needs.
Fossil fuel companies, gun makers, and right-of-centre websites need not apply. Everybody else better behave or else.
Been there, done that, got the T-shirt
Here’s the issue: Professor Omarova is still in the clutches of Marxism, that is, of an ideology that is not based on any economic rules, and never has been. The Capital (Das Kapital in its German original) on which Professor Omarova has based her knowledge of economics (or lack thereof) tries to make up its own rules.
Except: these rules have proven themselves an utter failure.
Centralisation of banks under government’s umbrella won’t reduce systemic risks, Professor Omarova’s basic view. Should there be a single financial institution, and should that institution commit a major mistake, there wouldn’t be anyone else to throw a life jacket out.
That’s what happened in communist countries all over the world, and should America go down that same path, it would mean ruin sooner rather than later. Basing economic decisions on ideology just does not work.
Yes, there should be academic freedom. It should be an academic’s right to offer the weirdest of ideas. Science performed in the hallowed halls of the Academia is all about debate.
It’s worse than insane. It’s one thing when someone proposes unadulterated ideology for a solution that heals all of economy’s ails in a university paper. It’s another matter altogether when a person like that is allowed to make decisions about the lives of others.
Teaching financial regulation and corporate governance at Cornell is no proof that such person knows how to get down from her/his Ivory Tower lodgings.
When Omarova moved to America in 1991, she wasn’t a refugee trying to escape communist dictatorship. She crossed the Big Pond to study for and receive a Ph.D. in political science from the University of Wisconsin–Madison (UW), and to qualify as a Juris Doctor from Northwestern University Pritzker School of Law. Omarova’s thesis as UW was titled, The Political Economy of Oil in Post-Soviet Kazakhstan.
Perhaps she should have stuck to that topic. It could prove more useful than her work on “National Investment Authority” (NIA).
Omarova herself likened the plan to the economic gibberish known as New Deal, the nonsense that introduced the atmosphere of entitlement into a country based on self-reliance and individual responsibility.
She wouldn’t stop there: her newest pièce de résistance is called The People’s Ledger: How to Democratize Money and Finance the Economy.
That’s where she stated that the Federal Reserve should “effectively end banking as we know it.”
While Professor Omarova may have a valid point in doubting cryptocurrencies and companies such as Facebook entering that frightfully dangerous field, her proposed solution is based on dictatorial and authoritarian methods of government.
What she wants is to return her new country to a failed system that she had left behind.
Following Omarova’s official nomination, a 1995 police report surfaced, documenting that she had tried to carry goods out of a T.J. Maxx store in Madison, Wisconsin, without the store’s consent.
That’s legalese for theft.
She tried to misappropriate $214 worth of merchandise before being caught. The haul included four pairs of shoes, two bottles of cologne, two belts and socks.
For those who love creepy details, the report said that a T.J. Maxx security agent on duty told police that he saw Omarova take the items by placing them into a large purse and covering them with other clothing items to obscure the stolen items.
The security agent testified that Omarova paid for several items at the jewellery counter but “made no attempt to pay for the items concealed in her purse.”
The White House would not comment, and it didn’t say whether Omarova still remains the White Knight in the chase for the Comptroller office.
What does this ancient incident have to do with the potential assignment of Saule Omarova to the office that controls the flow of money in her adopted country?
Not much, obviously, as her defenders have decided the accusation was your typical anti-Asian smear.