Today’s News

FDIC Chairman Martin Gruenberg announced he will resign following an investigation that uncovered widespread sexual harassment at the agency, bowing to bipartisan pressure for new leadership. 

In an email to staff on Monday, Gruenberg announced his intention to resign once a successor is confirmed, averting a situation where FDIC Vice Chairman Travis Hill, a Republican, would assume the role of acting chairman. 

“It has been my honor to serve at the FDIC as Chairman, Vice Chairman, and Director since August of 2005.” He continued, “In light of recent events, I am prepared to step down from my responsibilities once a successor is confirmed.” Gruenberg affirmed his commitment to fulfilling his responsibilities until then, “including the transformation of the FDIC’s workplace culture.” 

The White House is expected to nominate a replacement soon, according to deputy press secretary Sam Michel. He said, “The president of course expects the administration to reflect the values of decency and integrity and to protect the rights and dignity of all employees.” Democratic insiders anticipate that any nominee for FDIC chairman, chosen by President Biden, will be a woman previously confirmed by the Senate with a healthy margin. 

Gruenberg, a Democrat known for his critical stance on Wall Street, has been a prominent figure at the FDIC for nearly two decades. His departure comes at a critical juncture for the agency, which is grappling with the fallout from recent bank failures and ongoing challenges posed by elevated Federal Reserve interest rates. The FDIC is also collaborating with other regulators on initiatives to tighten banking regulations, including a contentious proposal to increase capital requirements for large banks. 

Despite the controversy, Gruenberg has maintained his position since November when a Wall Street Journal report uncovered widespread misconduct at the FDIC. The report, corroborated by an external review, led to calls for his resignation from both Republicans and some Democrats.  

The pressure intensified after Democratic Senator Sherrod Brown, chair of the Senate Banking Committee, demanded “fundamental changes” at the FDIC and called for new leadership. He said, “I am left with one conclusion: there must be fundamental changes at the FDIC. 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.” 

“It’s a stalemate and it achieves most of the goals of the administration – that is, to retain control over the FDIC’s agenda,” said Todd Baker, a senior fellow at Columbia University’s law and business schools. 

Analysts are uncertain how long it will take the White House to secure Senate confirmation for a new nominee. Senator Tim Scott, Brown’s Republican counterpart, and other Republicans have urged Gruenberg to step down immediately. Ian Katz, managing director of policy research firm Capital Alpha Partners, noted, “This is like trying to contain a raging fire.” 

If Gruenberg leaves before a successor is confirmed, the FDIC’s vice chair, Travis Hill, a Republican, would assume leadership, potentially resulting in a 2-2 deadlock on the board. 

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