White House will 'soon' nominate replacement for FDIC Chairman Martin Gruenberg, who is resigning amid allegations of internal agency misconduct

 May 21, 2024

A top federal banking regulator will soon resign and be replaced amid serious allegations of misconduct that have gone unaddressed for years.

The White House revealed on Monday that Martin Gruenberg, chairman of the Federal Deposit Insurance Corp., will "soon" step down from his long-held role once a successor has been appointed by President Joe Biden and confirmed by the Senate, the Associated Press reported.

A spokesman for the White House, in response to mounting demands from lawmakers for a change at the FDIC, said that Biden expects the regulatory agency "to reflect the values of decency and integrity and to protect the rights and dignity of all employees."

Eventual resignation announced

Fox Business reported Monday that FDIC Chairman Gruenberg announced his plans to resign following increasing calls from members of Congress for him to vacate his position. The exact date of his departure, however, remains unspecified.

"It has been my honor to serve at the FDIC as Chairman, Vice Chairman, and Director since August of 2005. Throughout that time I have faithfully carried out the critically important mission of the FDIC to maintain public confidence and stability in the banking system," Gruenberg said in a statement.

"In light of recent events, I am prepared to step down from my responsibilities once a successor is confirmed," he added. "Until that time, I will continue to fulfill my responsibilities as Chairman of the FDIC, including the transformation of the FDIC’s workplace culture."

Abusive leadership in a toxic work environment

The outlet reported that Gruenberg, who has held various leadership roles at the FDIC for nearly two decades, first came under fire in November 2023 after media reports exposed allegations of a "toxic" work environment replete with abuses of power, complaints from employees that were ignored, and gross or repeated misconduct that went unpunished by management, among other claims.

Those claims were further expanded upon in an independent review by an outside law firm that provided a damning confirmation of the "allegations of sexual harassment and interpersonal misconduct at the FDIC, including hostile, abusive, unprofessional, or inappropriate conduct, as well as management’s response to these allegations."

Notably, the report specifically called out Gruenberg for his notorious "temper" that had a "chilling" effect on complaints and fostered the poor workplace environment, including a reluctance by middle and upper management to share bad news with him or take action to address problems.

Sen. Brown joins GOP calls for Gruenberg to go

That independent report led to Senate Banking Committee hearings last week in which Gruenberg was grilled by Democratic and Republican senators alike and bolstered the demands from those and other lawmakers for him to be fired or to resign and be replaced, per Fox Business.

"After chairing last week’s hearing, reviewing the independent report, and receiving further outreach from FDIC employees to the Banking and Housing Committee, I am left with one conclusion: there must be fundamental changes at the FDIC," Chairman Sherrod Brown (D-OH) said in a press release. "Those changes begin with new leadership, who must fix the agency’s toxic culture and put the women and men who work there -- and their mission -- first."

"That’s why I’m calling on the President to immediately nominate a new Chair who can lead the FDIC at this challenging time and for the Senate to act on that nomination without delay," the Ohio Democrat added. "I expect that the entire Banking and Housing Committee and Senate leaders, in both parties, will put politics aside and join this effort to bring new leadership to the agency to ensure a safe workplace for the women and men who protect our financial system."

Democrats more concerned with protecting agenda than fixing FDIC's internal workplace issues

Fox Business observed that Sen. Brown did not call for Chairman Gruenberg's immediate resignation, which would result in the FDIC's board being deadlocked at 2-2, with nominal leadership falling to the agency's Republican vice-chair, but rather left open the possibility for him to continue serving until a replacement is nominated and confirmed.

Semafor reported that Brown also stands alone among Democrats in joining Republicans who have called for Gruenberg's ouster, as most other Democrats have either ignored the allegations against the FDIC head or downplayed the claims and tempered their criticisms -- likely to protect their progressive regulatory agenda that would be upended, or at the very least delayed, by a sudden change in leadership.

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