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A Biden nominee wrote a paper in which she explored moving all private deposit accounts to the Federal Reserve in the advent of digital currency.
She called this work a “thought experiment.” She did not demand that all private bank accounts be eliminated.
A claim spreading across social media is that one of President Joe Biden’s nominees is demanding an end to all private bank accounts.
"Biden’s banking nominee demands all ‘private bank accounts’ be eliminated," reads a headline from Neon Nettle, an online news site that has spread misinformation in the past. Versions of this claim have been repeated on other sites.
The story claims that Biden's nominee for comptroller of the currency, Saule Omarova, "vowed to eliminate all private bank accounts and deposits" during a virtual conference in March this year. The comptroller of the currency regulates the federal banking system, including big Wall Street banks.
The post was flagged as part of Facebook’s efforts to combat false news and misinformation on its News Feed. (Read more about our partnership with Facebook.)
Omarova did write a lengthy paper exploring the idea of deposit accounts being provided through the Federal Reserve rather than private banks with the advent of digital currency. But claims that she "demanded" or "vowed" to do so go too far.
Omarova’s nomination has faced strong opposition from Republicans, who have questioned her work and childhood in Kazakhstan, when it was part of the former Soviet Union. Sen. Pat Toomey, R-Pa., called Omarova’s ideas "radical" and "socialist."
The Neon Nettle story includes an embedded YouTube video of the virtual conference, called "Law & Political Economy: Democracy Beyond Neoliberalism." It was recorded on Jan. 28 and posted in March. Omarova was nominated in September.
During her presentation, Omarova, a professor at Cornell Law School, talked about a paper she wrote, and described it as a way to try to re-design the current financial system to connect it more directly to the macro economy, and to make the connection more effective and equitable for everyone. She said the purpose for her proposal was to change the public-private power balance in finance. She called the Federal Reserve’s balance sheet the "crucial lever" in achieving this. Her re-design is a work in progress, she said, and called it "a complex project."
The Fed can indirectly induce private banks to increase their lending, but cannot force them to do so, she said. Her vision was for the Fed to expand its role, to be a central bank for the people, to have the Fed be at the center of the economy and have it work in a most public interest-oriented way, she said. She said her paper pushed the idea of "Fed accounts," or digital dollar deposit accounts for everyone, "to the limit, and to imagine what would it be like if instead of being just a public option for deposit banking, this would be actually the full transition, in other words, there would be no more private bank deposit accounts, and all of the deposit accounts will be held directly at the Fed." She called her idea a "thought experiment."
Later in the conference she said she doesn’t "have complete answers for everything," and again calls her work a "thought experiment."
An introduction to her paper said that her work "envisions the complete migration of demand deposit accounts to the Fed’s balance sheet."
She was asked about her paper during a Nov. 18 Senate confirmation hearing, and said that she did not want to end banking as it’s known today, and that she was grappling, as an academic, with what it would look like if there were digital currency. She said that she never said that Fed accounts were the only solution, or the best solution, that Congress should take, but that it is one option that Congress should consider. She has also said that changing the way the Fed operates is not under the jurisdiction of the comptroller of the currency.
We reached out to a spokesperson for Omarova but did not receive a response.
In testimony posted on the Senate Banking Committee website, Omarova said that if confirmed, she would work to make sure that there is a "fair and competitive market" for small and mid-sized banks.
Social media posts claim that Omarova, a Biden administration nominee for comptroller of the currency, is demanding that private bank accounts be eliminated.
During a January 2021 conference, Omarova said that she wrote a paper exploring what would happen if the Federal Reserve system offered deposit accounts, and private banks did not. She called her paper a thought experiment. She did not demand that this happen. The conference occurred more than six months before she was nominated.
The headline and story use words like "demand," and "vowed," to give the impression that she said that she would eliminate private bank accounts in her position as comptroller of the currency. She has not done that.
The statement contains an element of truth but ignores critical facts that would give a different impression. We rate it Mostly False.
Neon Nettle, "Biden’s Banking Nominee Demands All ‘Private Bank Accounts’ Be Eliminated," Nov. 14, 2021. Accessed Nov. 16, 2021.
News Binding, "WATCH: Biden’s Banking Nominee Calls to Eliminate All ‘Private Bank Accounts,’" Nov. 14, 2021. Accessed Nov. 16, 2021.
Bloomberg Businessweek, "A Fight Over Biden’s Pick for a Banking Watchdog Gets Nasty," Oct. 26, 2021. Accessed Nov. 16, 2021.
New York Magazine, "Who’s Afraid of Saule Omarova," Nov. 17, 2021. Accessed Nov. 17, 2021.
YouTube, "LPE Conference: LPE & Macro," posted March 9, 2021. Accessed Nov. 17, 2021.
Statement of Saule Omarova, nominee for Comptroller of the Currency, U.S. Senate, Committee on Banking, Housing, and Urban Affairs, Nov. 18, 2021. Accessed Nov. 18, 2021.
Omarova, Saule T., "The People’s Ledger: How to Democratize Money and Finance the Economy," Oct. 20, 2020, revised October 2021. Cornell Legal Studies Research Paper No. 20-45, 74 Vanderbilt Law Review 1231 (2021).
Washington Post, "Saule Omarova, Biden’s pick to lead a key banking agency, set for tough confirmation hearing," Nov. 18, 2021. Accessed Nov. 19, 2021.
C-SPAN, video, "Confirmation Hearing for Comptroller of Currency," Nov. 18, 2021. Accessed Nov. 18, 2021.
U.S. Senate Committee on Banking, Housing, and Urban Affairs, news release, "Toomey: I’ve Never Seen a Nominee with More Radical Ideas," Nov. 18, 2021. Accessed Nov. 19. 2021.
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