Biden Banking Nominee Wants To 'Starve' Companies That Invest in Oil and Gas

Saule Omarova attended Moscow State University on a Lenin scholarship

Saule Omarova in 2018 / Senate Committee on Banking, Housing, and Urban Affairs
November 9, 2021

President Joe Biden’s pick to regulate the banking system said earlier this year that she wants to "starve" companies of money to invest in the oil and gas industry in order to fight climate change, comments that could further complicate her chances of Senate confirmation.

Saule Omarova, who received the Lenin Personal Academic Scholarship at Moscow State University, has proposed establishing a National Investment Authority to divert investments away from the oil and gas industry and into "clean and green" infrastructure projects. Speaking at a virtual forum in May, Omarova said "the way we basically get rid of those carbon financiers is we starve them of their sources of capital."

Omarova, the nominee to lead the Office of the Comptroller of the Currency, faces stiff opposition from Senate Republicans over the National Investment Authority proposal, as well as her calls to "end banking as we know it." Omarova has proposed allowing the Federal Reserve to handle consumer bank deposits, replacing private banks.

At least three Democrats—Sens. Jon Tester (D., Mont.), Kyrsten Sinema (D., Ariz.), and Joe Manchin (D., W.Va.)—have expressed concerns about Omarova, Axios reported. Omarova took a shot at Manchin at the May forum, saying that while the senator is "supposedly on the Democratic side," he is "very uncomfortable with big spending ideas." Manchin has opposed the Green New Deal and other measures that aim to kill off the fossil fuel industry.

Omarova, a professor at Cornell Law School, says her proposed National Investment Authority would serve as the "fighting muscle" of the progressive-backed Green New Deal. Under Omarova’s proposal, the National Investment Authority would create investment funds and issue bonds in order to lure investors to fund clean energy projects, sapping oil and gas projects of their funding. The agency, which Omarova modeled after the New Deal-era Reconstruction Finance Corporation, would work closely with the Federal Reserve and Treasury Department, which oversees the Office of the Comptroller of the Currency.

Should Omarova be confirmed, she will join a growing debate over what role the Federal Reserve, Treasury Department, and Office of the Comptroller of the Currency should play in forcing banks and other financial institutions to develop so-called climate risk management strategies. Michael Hsu, the acting comptroller of the currency, said Monday that the agency will release "high-level supervisory expectations for large banks related to climate risk management."

Left-wing environmentalist groups have praised Omarova’s nomination, saying she will help defund investments in oil and gas projects. The Sierra Club said Omarova would fight "climate chaos" and set up "guardrails against Wall Street's risky fossil fuel investments." Biden has faced criticism amid rising gas prices for shutting down oil and gas pipelines in the United States. The administration killed the Keystone XL pipeline, which would have transported oil from Canada. At the same time, Biden relaxed sanctions against a Russian pipeline that observers fear will be used to advance Russian president Vladimir Putin’s influence over Europe.

Omarova has also faced scrutiny over her academic record and comments in support of some Soviet-era economic policies. In 2019, Omarova said the Soviet Union was superior in some ways to Western market economies because state control of paychecks to workers meant there was no gender pay disparity. Sen. Pat Toomey (R., Pa.), the ranking member of the Senate Banking Committee, has called on Omarova to turn over a copy of a thesis she wrote on Karl Marx when she studied at Moscow State University. Omarova scrubbed her résumé of references to the thesis prior to her nomination.

Omarova did not respond to a request for comment.