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FDIC Chief Martin Gruenberg to Step Down as New Banking Rules Loom
FDIC Chairman Martin Gruenberg said Monday he is prepared to resign less than a week after rejecting bipartisan calls for him to step down, a move that could have implications for an aggressive campaign to impose tougher regulations on U.S. banks. .
Gruenberg has been the target of reports revealing a toxic workplace rife with sexual harassment, bullying and other misconduct, including a 234-page independent review commissioned following stories published by the Wall Street Journal.
Just last week, the head of the FDIC made it clear that he wanted to remain in charge so he could help the agency solve its problems.
That changed this week as his support on Capitol Hill waned.
President of the Federal Deposit Insurance Corporation, Martin Gruenberg. REUTERS/Kevin Lamarque/File photo (REUTERS/Reuters)
“In light of recent events, I am prepared to step down from my responsibilities as soon as a successor is confirmed,” he said in a statement. “Until then, I will continue to fulfill my responsibilities as Chairman of the FDIC, including transforming the FDIC’s workplace culture.”
Perhaps the turning point came after Senate Banking Committee Chairman Sherrod Brown on Monday called on President Biden to appoint a new agency chairman to restore the FDIC’s workplace culture. Brown did not call for Gruenberg’s resignation during a committee hearing last week.
“There must be fundamental changes at the FDIC,” Brown said Monday. “These changes begin with new leadership, which must correct the agency’s toxic culture and put the women and men who work there – and its mission – first.”
“That’s why I urge the President to immediately nominate a new chairman who can lead the FDIC in this challenging time, and for the Senate to act on that 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 to protect the rights and dignity of all the employees”.
Senator Sherrod Brown (D-OH). REUTERS/Amanda Andrade-Rhoades (REUTERS/Reuters)
“The President will soon introduce a new nominee for Chairman of the FDIC who is committed to these values and to protecting consumers and ensuring the stability of our financial system, and we expect the Senate to confirm the nominee quickly.”
Gruenberg’s departure could have implications for the financial world. It comes at a time when the FDIC, Federal Reserve and OCC are pushing for a comprehensive review of how banks are regulated following last spring’s regional banking crisis.
The story continues
Last July, U.S. proposed banking regulators increasing capital requirements for banks by an aggregate total of 16%, widening the scope of the new rules to include banks with just $100 billion in assets.
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 deposit withdrawals.
The banks, their lobbyists and some Republican lawmakers defend the proposal it would restrict lending and hurt the economy.
Even Fed Chairman Jay Powell hinted at reservations about the capital proposal and its impact and said he expects changes to be made.
Michael Barr, the Fed’s vice chairman for supervision, reiterated on Monday that he expects “broad and material changes” to the proposal.
Sen. Elizabeth Warren said at last week’s Senate Banking Committee hearing that Republicans wanted Gruenberg to resign so they could have more control over banking regulations.
“His resignation would do nothing to improve the culture of the FDIC, but it would give Republicans veto power over banking policy,” Warren said at the hearing, which Gruenberg attended.
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