Thread by @GeorgeSelgin

Some responses to @ddayen and @leee_harris from this non-Wall Street critic of Omarova's views.

https://twitter.com/DanAwrey/status/1443222822864793606

"Omarova immediately faced a flood of criticism from the banking industry, described as 'radical'." Omarova herself describes the proposals in her "The People's Ledger" so. And they are extremely radical in fact. So that's no "red herring." papers.ssrn.com/sol3/papers.cf…

"Omarova has been primarily condemned for musing in an academic paper last year about how individual bank accounts at the Federal Reserve could replace private deposits." This, too, is disingenuous.

Omarova makes no bones about the fact that "The People's Ledger" isn't just "musings": it is a perfectly earnest "blueprint" for addressing "a matter of utmost public policy importance." To suggest that she doesn't actually favor its proposals is very misleading.

"It sounds scary enough—eliminate all private banking!" It does--because it is! And you don't have to be a banker to think so: mere awareness of the likely consequence of putting bureaucrats in complete charge of allocating so much credit should suffice.

While others would make FedAccounts an option "Omarova takes it a step further and says it could be made mandatory." Not just "could": Omarova favors disallowing ordinary bank deposits as the "more effective" way of implementing her plan.

"The Federal Reserve, not the OCC, would be the main driver of this policy. “[Omarova] can’t do this unilaterally." True. But even the most responsible bankers would still have a reason for not wanting to be regulated by someone who'd like to "end banking as we know it."

So, while it's no doubt true that many bankers would oppose Omarova's appointment even if her views were less radical, and that to them those views serve as a convenient cudgel for the banking industry to try and stop Omarova from actually regulating them," ...

It hardly follows that the criticisms they (and many others) are voicing are nothing more than a "red herring."

There are in fact a number of very prominent people in Congress today, and as many prominent persons advising them (all law professors), who don't see any value in allowing banks to finance loans using deposits, and would like to hand the business to the Fed.

Though I do not work for Wall Street, and I realize fully well that the banking industry has a lot to answer for, I think this radical plan would ultimately do immense harm.

For that reason I don't hesitate to add my complaints about the plan to those bankers have expressed. Of course they care about their survival for its own sake; and perhaps they're being insincere. But I hope no one will accuse me of being so.