FDIC Chairman Martin Gruenberg said Monday he was prepared to resign less than a week after rejecting bipartisan calls to resign, a shakeup that could have implications for an aggressive campaign to impose regulations stricter on American banks.
Gruenberg has been reeling from reports revealing a toxic workplace riddled with sexual harassment, bullying and other misconduct, including a 234-page independent study commissioned following articles published by The Wall Street Journal.
Just last week, the head of the FDIC made it clear that he wanted to stay in charge so he could help the agency solve its problems.
That changed this week as his support on Capitol Hill eroded.
“In light of recent events, I am prepared to step down from my responsibilities once a successor is confirmed,” he said in a statement. “Until then, I will continue to fulfill my responsibilities as FDIC Chairman, including transforming the FDIC workplace culture.”
The turning point may have come after Senate Banking Committee Chairman Sherrod Brown on Monday called on President Biden to appoint a new agency chairman to restore the FDIC’s work culture. Brown did not call for Gruenberg’s resignation during a committee hearing last week.
“There needs to be fundamental changes at the FDIC,” Brown said Monday. “These changes start with new leadership, which must address the agency’s toxic culture and prioritize the women and men who work there – and their mission.”
“That is why I call on the President to immediately nominate a new chairman who can lead the FDIC during this difficult time and for the Senate to act on this nomination without delay,” Brown added.
Gruenberg’s replacement must be nominated by the president and confirmed by the Senate.
Biden’s deputy press secretary, Sam Michel, said that “while the FDIC is an independent agency, as we have said, the president of course expects the administration to reflect the values of decency and integrity and protects the rights and dignity of all employees.
“The President will soon nominate a new nominee for FDIC Chairman who is committed to upholding these values, protecting consumers, and ensuring the stability of our financial system, and we hope the Senate will quickly confirm this nominee.”
Gruenberg’s exit could have implications for the financial world. This comes just as the FDIC, Federal Reserve and OCC are pushing for a radical overhaul of how banks are regulated following last spring’s regional banking crisis.
Last July, U.S. banking regulators proposed increasing bank capital requirements by a total of 16%, expanding the scope of the new rules to include banks with assets of no more than $100 billion. .
Officials argued the changes were needed to make banks stronger and better prepared for shocks like this spring’s crisis, when the failures of Silicon Valley Bank, Signature Bank and First Republic triggered withdrawals. deposits.
Banks, their lobbyists and some Republican lawmakers say the proposal would reduce lending and hurt the economy.
Even Fed Chairman Jay Powell has hinted at reservations about the capital proposal and its impact and said he expects changes to be made.
Michael Barr, the Fed’s vice chair for supervision, reiterated Monday that he expects “significant and significant changes” in the proposal.
Sen. Elizabeth Warren said at the Senate Banking Committee hearing last week that Republicans want Gruenberg to resign so they can have more control over banking regulations.
“Your resignation would do nothing to improve the culture of the FDIC but it would give Republicans a veto over banking policy,” Warren said at the hearing Gruenberg attended.
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