FDIC Chair to Step Down After Scathing Report on 'Sexualized' Culture

If Gruenberg were to ever leave without a replacement being confirmed, the FDIC would be split evenly 2-2 between Democrats and Republicans. In that instance, Travis Hill, the FDIC vice chairman, a Republican who has criticized some of the regulatory proposals championed by Gruenberg, would lead the regulator temporarily.

The FDIC, the Federal Reserve and Office of the Comptroller of the Currency are working on a plan that would force big banks to hold significantly more capital to buffer against losses. Wall Street firms have vigorously lobbied against the plan and Republicans at the regulators have been more receptive to industry’s arguments.

It’s unclear how quickly the White House can nominate and win Senate approval of a permanent chair, but delays in confirming presidential nominees are common during election years.

Intense Pressure

Sam Michel, deputy press secretary at the White House said in a statement that Biden would “soon put forward a new nominee for FDIC chair who is committed to those values and to protecting consumers and ensuring the stability of our financial system, and we expect the Senate to confirm the nominee quickly.”

Gruenberg has been serving in his second stint as chairman and has been an FDIC board member since 2005. In addition to twice serving as FDIC chairman, he has led the agency in an acting capacity. Before joining the regulator, Gruenberg, who was trained as a lawyer, worked for almost two decades as a Senate staffer.

Some of the allegations of misconduct in the law firm’s report were fairly recent. Others go back decades — as early as the 1980s — under more than one chair. Some Democrats had argued that former leaders of the agency, including Republican-appointed chairs, should shoulder some of the blame and that Gruenberg could fix the agency’s problems.

However, by Monday the political pressure had grown too intense. In a sign of things to come, Sheila Bair, who led the FDIC during the financial crisis and remains influential in banking policy circles, said in a post on X that Gruenberg should signal he’ll step down.

“This controversy is hurting him and the agency,” she said.

FDIC Chairman Martin Gruenberg. (Credit: Bloomberg)