[Congressional Record Volume 167, Number 184 (Wednesday, October 20, 2021)]
[Senate]
[Pages S7112-S7113]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]



                      Nomination of Saule Omarova

  Mr. TOOMEY. Madam President, I rise today to discuss President 
Biden's nominee to serve as one of our Nation's chief banking 
regulators.
  About a month ago, President Biden announced his intention to 
nominate Cornell University Law Professor Saule Omarova to serve as 
Comptroller of the Currency.
  I was on the floor recently, and I spoke about her nomination. And I 
noted at the time that she has been celebrated on the far left for 
promoting ideas that she herself has described as ``radical.'' It is 
one of the few things on which I agree with her. These are radical 
ideas. In fact, they are very radical ideas.
  And most disturbing about this is they demonstrate--these ideas of 
hers--a very clear aversion to America's free enterprise system at a 
very fundamental level, despite the fact that our free enterprise 
system has produced an incredible level of prosperity and standard of 
living.
  I have to say, I don't think I have ever seen a more radical choice 
for any regulatory spot in our Federal Government that I can think of 
than Professor Omarova. And let me be clear. That assessment is based 
on the things that Professor Omarova has written and said in her own 
words, often quite recently.
  So today I want to focus on just one of the radical ideas that she 
presented in great detail in a paper that she wrote in 2016--not 
exactly ancient history. This is her plan to have the Federal 
Government set wages and prices for large sectors of the U.S. economy; 
in fact, the most important goods and services in our economy.
  Under her plan, the Federal Government would designate--and these are 
her words--``systemically important prices and indexes'' or ``SIPIs.'' 
She creates an acronym for these things; she calls them SIPIs--for the 
Federal Reserve to regulate.
  So she details five different approaches, different ways, that the 
government could regulate and take control over these prices of these 
systemically important goods. And they are all--it is all a terrible 
idea based on the completely erroneous premise that somehow the 
government knows what the price of these things should be.
  But among all of them, one that is maybe the most troubling is one 
that she describes here. And this is what Professor Omarova argued. She 
says: ``The . . . final regulatory option we think worth considering is 
. . . price maintenance--typically within some band--through OMOs.''
  Now, OMO stands for open market operations, and that is an operation 
that the Federal Reserve engages in. But the Fed uses open market 
operations--or OMOs, in Professor Omarova's lexicon--to just buy and 
sell securities for one purpose, and that is to manage the amount of 
money in the supply--in the economy, to manage monetary policy, to do 
it by managing the supply of money. That is it.
  What Professor Omarova is advocating for is a radical departure from 
this very, very narrow and limited activity. What her plan would do is 
to empower the Fed--and these are her

[[Page S7113]]

words--``to buy and sell in markets . . . with a view to keeping 
particular [systemically important prices] within particular bands 
thought necessary for the purposes of maintaining systemic stability.''
  Wow. Now, what kind of prices does Professor Omarova have in mind for 
the Fed to control by buying and selling these commodities? Well, she 
tells us. She says:

       Various candidate SIPIs here come to mind. . . . Certain 
     sensitive commodity prices--those for widely used fuels, 
     foodstuffs, and some other raw materials, for example--
     constitute another class of candidates. Finally, wage or 
     salary indices constitute yet another class of candidates.

  Now, here are some of the other candidates for price controls that 
she has in mind: ``home prices,'' ``productive inputs'' such as 
``energy,'' ``certain . . . metals, and other natural resources.''
  In other words, like all the most important commodities in America, 
under Professor Omarova's radical plan, it would be the government that 
would set these prices rather than a free market determining how these 
prices should be set. The government would control everything from the 
size of your paycheck to the amount you pay at the grocery store for a 
gallon of milk or a gallon of gasoline.
  There is no more allocation of scarce goods based on who values them 
the most--the brilliance of the way that a spontaneous market allocates 
resources automatically to their best and highest use and enables us to 
have the lowest possible cost for the most possible goods. None of 
that. No more.
  We will have a committee--it is called the Fed Open Market 
Committee--and they will dictate the prices that we will pay and how 
the resources of America will be allocated.
  Now, if her radical idea sounds familiar, that is because it is 
familiar. It has been tried--been tried several times--repeatedly, and 
every single time it has failed spectacularly, time and again, in all 
the centrally planned economies in the world, especially the Soviet 
Union.
  In fact, Soviet efforts to control prices in their economy were so 
abysmal, they failed so badly that they spawned countless jokes within 
the Soviet Union that illustrate the folly of central planning, the 
inherent impossibility of central planning.
  One of my favorites is about a guy who walks into a store. He walks 
up to the shopkeeper and says: You don't have any meat, do you?
  And the shopkeeper replies: No, we don't have any fish. It is the 
store next door that doesn't have any meat.
  So we can laugh about these things that people living under the 
misery of the Soviet Union, they had a sort of gallows humor about the 
misery of their circumstances.
  But the fact is, it was this notion that a really smart committee at 
the center of the government could dictate the prices and the 
allocation of all resources; that idea is what caused the misery--
ultimately, of course, caused the collapse of the Soviet Union.
  This is what happens anywhere where governments try to control what 
should be left to the free men and women in terms of allocating 
resources. Government-run economies, like the very one that Professor 
Omarova is proposing--they don't work.
  And let me stress a point that I have made before about Professor 
Omarova. The fact that she was born and raised in the Soviet Union has 
absolutely nothing to do with whether or not the Senate should confirm 
her to run a major financial agency.
  There are some unbelievably wonderful, successful, patriotic, 
terrific American citizens who had the misfortune of growing up behind 
the Iron Curtain. That has nothing to do with whether or not she is 
qualified for this job. It is her advocacy for the policies that, in 
disturbing ways, resemble those of the Soviet Union--that is what 
should inform our judgment about whether this person should be the 
chief regulator of the Nation's federally chartered banks.
  Now, Professor Omarova would likely argue that her centrally planned 
economy would be different. That is always the case. This time we will 
get socialism right. As her paper notes, the Fed does already use open 
market operations to implement monetary policy. That is true. So why 
not let the Fed use a similar mechanism to set and maintain stable 
prices for all kinds of important assets?
  Well, the answer is simple: Making decisions about what individual--
maybe dozens, maybe hundreds of individual assets across something as 
complex as our entire economy, what they should cost, how they should 
be allocated, that is an impossibly complex endeavor. There is no 
technocrat, no bureau, no committee, no agency--there is no entity that 
can figure that out.
  It is the organic decisions, individual decisions, of millions of 
free people that spontaneously create the allocation that maximizes the 
well-being of the people of a free society.
  By the way, there is a pretty strong case to be made that the 
government doesn't do such a great job on monetary policy either. 
People that we have serious doubts about how well they set the price of 
a single thing--namely, the U.S. dollar--do we want them directly 
controlling the prices of everything or at least everything that is 
important? I think not.
  So the more I read the radical ideas that Professor Omarova has 
advocated for and the more I think about the damage this would do to 
our economy and our society, the more troubled I am by her nomination. 
So I strongly urge President Biden to reconsider his nomination, his 
decision to nominate her.