FDIC Chairman To Resign Following Report On Agency’s ‘Toxic Culture’

NEW YORK (AP) — Martin Gruenberg, the chairman of the Federal Deposit Insurance Corporation, will step down from his post once a successor is appointed, the White House said Monday.

Gruenberg’s announced departure comes after damning report about the agency’s toxic workplace culture was released earlier this month and political pressure from the top Democrat on the Senate Banking Committee, who called for his resignation earlier in the day.

In a statement, the White House said that President Joe Biden will name a replacement for Gruenberg “soon” and called for the Senate to quickly confirm the person’s nomination.

Prior to the announcement, Sen. Sherrod Brown (D-Ohio) called for President Joe Biden to replace Gruenberg, saying the agency is broken and there must be “fundamental changes at the FDIC.”

Last week, Gruenberg was unable to convince Congress in testimony that he would be able to turn the agency around despite the report saying Greunberg himself was often the source of the problems.

“After chairing last week’s hearing, reviewing the independent report, and receiving further outreach from FDIC employees to the Banking and Housing Committee, I am left with one conclusion: there must be fundamental changes at the FDIC,” said Brown, chairman of the Senate Banking Committee.

Up until Monday, no Democrats had called for Gruenberg’s replacement, although several came very close to doing so in their own statements.

In his statement, Brown did not call for Gruenberg, who was the middle of his six-year term as chairman of the FDIC, to be fired. Brown instead called on President Biden to nominate a new chair for the FDIC “without delay,” which the Senate would then confirm.

Republicans had been calling for Gruenberg to step down for some time. At Thursday’s hearing, Sen. Tim Scott, R-S.C. and the top Republican on the committee, detailed several stories of female FDIC workers who outlined extreme harassment and stalking by their coworkers, complaints that were dismissed by supervisors, according to the report.

“Marty — you’ve heard me say this to you directly — you should resign,” Scott said. “Your employees do not have confidence in you. And this is not a single incident. This spans over a decade-plus of your leadership at the FDIC.”

Scott, who called for Gruenberg to step down in December when the initial allegations were made public, also called for the Banking Committee to hold a separate hearing on the FDIC’s workplace issues.

Gruenberg was involved in various levels of leadership at the FDIC for nearly 20 years, and this was his second full term as FDIC chair. His long tenure at the agency at the highest levels of power made him largely responsible for the agency’s toxic work environment, according to the independent report outlining the problems at the agency.

The report released Tuesday by law firm Cleary Gottlieb Steen & Hamilton cites incidents of stalking, harassment, homophobia and other violations of employment regulations, based on more than 500 complaints from employees.

Complaints included a woman who said she was stalked by a coworker and continually harassed even after complaining about his behavior; a field office supervisor referring to gay men as “little girls;” and a female field examiner who described receiving a picture of an FDIC senior examiner’s private parts.

The FDIC is one of several banking system regulators. The Great Depression-era agency is best known for running the nation’s deposit insurance program, which insures Americans’ deposits up to $250,000 in case their bank fails.

Sheila Bair, who was chair of the FDIC through the 2008 financial crisis and was one of the most prominent voices from government at that time, posted on Twitter on Monday that it would be best for the agency if Gruenberg would step down.

“This controversy is hurting him and his agency. For his own sake and everyone at the FDIC, he should announce his intention to resign effective with the appointment,” she said.

AP Treasury Department Reporter Fatima Hussein contributed to this report from Washington.