Wall Street has launched an all-out attack on Saule Omarova, President Biden’s nominee to be the primary regulator of big banks. But the financial industry’s lobbyists in Washington aren’t being honest about why she gets their hackles up. The truth is that Omarova, a distinguished law professor at Cornell and a former bank lawyer who worked in the George W. Bush Treasury Department, knows the ins and outs of a multi-billion-dollar profit center for big banks, one which they don’t want anyone but their own lawyers to understand: the derivatives market—a key engine of the calamitous financial crash of 2007 and 2008.
Put simply, Omarova knows where Wall Street’s skeletons are buried. She could soon—alas, probably not before Halloween—be in the perfect position to exhume those bones as head of the Office of the Comptroller of the Currency, or OCC, the regulator of U.S. national banks. If the banking lobby ever tried to engage with Omarova’s arguments in good faith, they’d never win the debate. She’s right, and they know it.
That’s why, since late September, Wall Street lobbyists, Republicans, and other big-bank advocates have waged
Senator Toomey did not express any similar misgivings when the Senate Banking Committee approved President Trump’s nomination of Jelena McWilliams to become FDIC Chairman in January 2018. as a “terrific” nominee, even though she grew up in Communist Yugoslavia.
During the early 2000s, big banks used their OCC-approved derivatives authority to create many new types of complicated, high-risk derivatives, including credit default swaps, or CDS, and synthetic collateralized debt obligations, or CDOs, two types of financial instruments that fueled the subprime mortgage meltdown of 2007 and 2008.
’“destruction. Dodd-Frank’s reform did not go far enough, however. Congress tried to ban banks from operating derivatives trading desks in the Lincoln Amendment that was attached to the Dodd-Frank legislation Act. However, Citigroup lobbyists that overturned that provision in 2014.