FDIC Chairman Martin Gruenberg to Resign

Martin Gruenberg, chairman of the US Federal Deposit Insurance Corporation (FDIC), announced on Monday his intention to resign following a critical report on the agency’s toxic workplace culture.

“In light of recent events, I am prepared to step down from my responsibilities once a successor is confirmed,” Gruenberg stated. He will remain in his role until his successor is appointed, continuing efforts to transform the FDIC’s workplace culture.

The White House confirmed that President Joe Biden would nominate Gruenberg’s successor soon.

The resignation follows intense scrutiny from Republicans during two Capitol Hill hearings last week. An independent report found widespread issues at the FDIC, including sexual harassment, discrimination, and mismanagement. More than 500 people contacted investigators via a hotline.

The report also criticised Gruenberg’s behaviour, noting he often lost his temper and interacted with staff inappropriately. Gruenberg apologised for his conduct during his testimony and claimed he was best suited to lead necessary changes at the FDIC. However, his position became untenable after Senate Banking Committee Chairman Sherrod Brown, a Democrat, urged President Biden to replace him.

“After chairing last week’s hearing, reviewing the independent report, and receiving further outreach from FDIC employees, I am left with one conclusion: there must be fundamental changes at the FDIC,” Brown said in a statement. “Those changes begin with new leadership.”

Gruenberg’s decision to remain until a successor is appointed prevents a split leadership at the FDIC, which could have stalled significant regulatory actions. Among these actions are the proposed capital banking requirements, part of the Basel III endgame, which would require large banks to increase their capital by about 19 percent. These requirements have faced criticism from big banks and Republicans for potentially harming small businesses.

Fed Chairman Jerome Powell, who initially voiced scepticism but voted in favour of the requirements last year, expects “broad and material” changes to Basel III. Fed Vice Chairman for Supervision Michael Barr reiterated this stance, emphasising the importance of completing the regulatory response to the 2008 financial crisis.

Gruenberg has served on the FDIC’s board of directors since 2005.