After FDIC Chair Martin Gruenberg Resigns Amid Toxic Workplace Scandal, What’s Next For The Agency?

Last week, Martin Gruenberg announced that he would be stepping down as FDIC Chair as soon as the Biden administration confirms his successor. After serving for nearly 20 years, Gruenberg’s resignation coincides with a scathing report released last month detailing the widespread sexual harassment, discrimination and bullying within the agency.

Testifying before lawmakers last week, both Democrats and Republicans urged Gruenberg to resign, citing concerns about his contributions to the agency’s toxic workplace culture.

“It has been my honor to serve at the FDIC as Chairman, Vice Chairman and Director since August of 2005,” Gruenberg wrote in an email to staff.

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

Gruenberg’s resignation coincides with an FDIC-commissioned independent report released last month by the law firm Cleary Gottlieb Steen & Hamilton. The report, which confirmed the findings of a November Wall Street Journal investigation, highlights the long-standing problematic culture within many bank regulating agencies.

It stated that the FDIC needs “cultural and structural change” to combat years of sexual harassment, abuse and retaliation.

While the report did not find Gruenberg solely responsible for the issues detailed, it questioned whether he was the right person to spearhead such reforms, citing incidents of him “losing his temper and interacting with staff in a demeaning and inappropriate manner… particularly when being delivered bad news or conveyed views with which he disagrees.”

The report further found that Gruenberg’s temperament “may hinder his ability to establish trust and confidence in leading meaningful culture change.”

Gruenberg announced last week that he accepts these findings, telling lawmakers, “To anyone who has experienced sexual harassment or other misconduct at the FDIC, I again want to apologize and express how deeply sorry I am.”

He added, “I also acknowledge my own failures as Chairman, both in failing to recognize how my temperament in meetings impacted others and for not having identified deeper cultural issues at the FDIC sooner.”

Republicans have been calling for Gruenberg’s resignation since his involvement in ousting his short-lived FDIC successor Jelena McWilliams, who was appointed during the Trump administration. However, until this week, Rep. Bill Foster (D-Illinois) had been the only Democrat calling for Gruenberg’s replacement.

On Monday, Senate Chair Sherrod Brown (D-Ohio) urged Biden to replace Gruenberg, saying there must be “fundamental change” at the FDIC.

“Those changes,” he added, “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.”

Democratic lawmakers expressed outrage over last month’s report findings but stopped short of calling for his resignation, drawing criticism from Republicans for not putting more pressure on Gruenberg.

The White House announced that it intends to put a new nominee forward soon.

Deputy Press Secretary Sam Michel stated, “The President will soon put forth a new nominee for FDIC Chair who is committed to those values to protecting consumers and ensuring the ability of our financial system, and we expect the Senate to confirm the nominee quickly.”

Article by Riley Flynn