by Bryan Perry

November 16, 2021

This past week President Joe Biden raised the hair on the back of necks on Wall Street and Main Street when he announced his intention to nominate Professor Saule Omarova of Cornell Law School to be the next Comptroller of the Currency. This is just another “check the progressive identity box” for Biden within a larger movement to steer America toward socialism, and in this case economic communism.

Cornell Professor Saule Omarova Image

Omarova graduated from Moscow State University in 1989 on a Lenin Personal Academic Scholarship. Over 30 years after the fall of the Soviet Union, she still holds the view that the Soviet system is superior to the U.S. banking system, which she says should be nationalized and controlled by the Federal Reserve. (See Wall Street Journal, September 29, 2021 editorial, “Comptroller of the Economy…hates … banks.”)

Speaking at the “Law & Political Economy: Democracy Beyond Neoliberalism” conference last March, Omarova called for the elimination of all private bank accounts and deposits. Her writings also promote transferring all bank deposits to “Fed Accounts” at the Federal Reserve. She also floated the idea of how the Federal Reserve could take money from Americans during an inflationary environment.

Imagine that! With inflation now running at its highest level in 31 years (per last week’s PPI and CPI data), the President’s nominee may instruct the Fed to seize funds from private citizen’s bank accounts to pay for the inept policy decisions that cause runaway inflation expectations. So, when government screws up, they would have the right to exercise a “margin call” on taxpayer bank accounts to fix their mistakes.

Consumer Price Index Chart

Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.

Think this is a stretch? There is a long history of governments expropriating cash for the “greater good.”

  • In 2013, the European Union decided in its infinite wisdom to rob the personal bank accounts of Cyprus citizens to pay for its bailout of the country. It said in a statement it was a choice between the “catastrophic scenario of disorderly bankruptcy or the scenario of a painful but controlled management of the crisis.”
  • In 2008, Argentina’s government nationalized $30 billion in private pension funds to shore up its coffers, triggering an 11% sell-off in the Buenos Aires stock market.
  • In 2010, Hungary’s government made its citizens an offer they could not refuse. They could either remit their individual retirement savings to the state or lose the right to the basic state pension (but still have an obligation to pay contributions for it). In this extortionate way, the government gained control over $14 billion of individual retirement savings.
  • In 2001, Ireland’s National Pension Reserve Fund was establishedfor the purpose of supporting pensions of the Irish people in the years 2025-2050. The scheme was also supposed to provide for the pensions of some public sector employees. However, in March 2009, the Irish government earmarked $4 billion euros from this fund for rescuing banks. In November 2010, the remaining savings of $2.5 billion was seized in support of bailout efforts for the rest of the country.

The very idea that there is a clear template of governments tapping retirement savings as a convenient source of revenue should have investors on high alert with the nomination of Omarova.

These betrayals could look like small potatoes compared to what would take place in the much-larger U.S. economy if inflation pushed our economy into a recession while government spending continues to soar, risking a downgrade of U.S. sovereign debt from its current AAA rating.

Total U.S. retirement assets were $37.2 trillion as of June 30, 2021. Retirement assets accounted for 33% of all household financial assets in the United States at the end of June 2021. Of this amount, roughly $7.5 trillion was held in federal, state, and local government retirement plans – the rest (about $30 trillion) is held in private accounts. And $30 trillion is about what it would take to pay off the current federal debt.

Total Retirement Benefits Bar Chart

Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.

Comrade Omarova also thinks that asset prices, pay scales, access to capital, and credit should be overseen by federal agencies – by an unaccountable bureaucracy run by an academic intelligentsia. Her idea of establishing a National Investment Authority to be overseen by an advisory board of academics was rejected by the Senate in the current infrastructure bill that will be signed by President Biden this week.

Adding more fuel to her anti-capitalist resume, Ms. Omarova would pursue the establishment of an independent Public Interest Council of richly paid academics with broad subpoena power to supervise financial regulatory agencies, including the Federal Reserve. This would resemble a chamber of untouchable czars or overlords, take your pick. The council, she notes, “Would not be subject to the constraints and requirements of the administrative process.” Unaccountable to voters, or even laws?

Citizens of all means and net worth should be very afraid of the fact that Omarova got even this far in the nominating process. This is radicalism on steroids. As comptroller, Omarova would have supervisory power over roughly 1,200 financial institutions, able to crack down on banks that don’t goosestep to her dictates. Even Treasury Secretary Janet Yellen, to whom the comptroller reports, opposes her nomination.

Peas of the Same Pods - Similar Communists Images

If somehow Omarova does become Comptroller of the Currency, it won’t just be bad for the financial sector, it will be terrible for the market, for private citizens, and for America.

All content above represents the opinion of Bryan Perry of Navellier & Associates, Inc.

Please see important disclosures below.

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About The Author

Bryan Perry

Bryan Perry
SENIOR DIRECTOR

Bryan Perry is a Senior Director with Navellier Private Client Group, advising and facilitating high net worth investors in the pursuit of their financial goals.

Bryan’s financial services career spanning the past three decades includes over 20 years of wealth management experience with Wall Street firms that include Bear Stearns, Lehman Brothers and Paine Webber, working with both retail and institutional clients. Bryan earned a B.A. in Political Science from Virginia Polytechnic Institute & State University and currently holds a Series 65 license. All content of “Income Mail” represents the opinion of Bryan Perry

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