By Katanga Johnson | Bloomberg
Martin Gruenberg will step down as head of the Federal Deposit Insurance Corp. after findings of a toxic work environment put the regulator at the center of a heated political fight and fueled calls for his removal.
Gruenberg, 71, has faced mounting pressure following a scathing report detailed allegations of harassment and discrimination at the bank regulator during his tenure. Those findings earlier this month by law firm Cleary Gottlieb Steen & Hamilton were based on accounts from more than 500 people and a months-long probe into a Wall Street Journal article about female bank examiners facing a “sexualized, boys’ club environment.”
“In light of recent events, I am prepared to step down from my responsibilities once a successor is confirmed,” Gruenberg said in a statement.
After surviving two bruising days of congressional hearings last week, the political pressure on Gruenberg surged Monday when a key Democrat called on President Joe Biden to replace him. Breaking with other top Democratic lawmakers, Senate Banking Committee Chairman Sherrod Brown said that new FDIC leadership was needed to ensure “fundamental changes.”
Since the law firm’s report was released on May 7, Gruenberg had vowed to fix the agency’s problems and apologized repeatedly to employees. Last week, he told lawmakers, including Brown, that he was the correct person to lead a cultural overhaul at the agency.
The probe didn’t find that Gruenberg himself had engaged in harassment or discrimination, but cited examples of the FDIC chief losing his temper with staff and questioned whether he was best person to drive change.
The law firm report also questioned whether Gruenberg was the best person to lead a “cultural and structural transformation” it said was needed at the regulator.
Gruenberg’s pledge
For his part, Gruenberg vowed to fix the agency’s problems, repeatedly apologized to employees and has said the regulator is already undertaking measures recommended in the law firm’s report.
Republicans have attacked Democrats for not immediately calling on Gruenberg to resign, with some accusing them of having a double standard on issues like sexual harassment.
During a congressional hearing last week, Maxine Waters, the top Democrat on the House Financial Services Committee, defended Gruenberg and called Republican demands that he resign hypocritical. Elizabeth Warren, a Democrat from Massachusetts on the Senate Banking Committee, also signaled he should remain.
But in another sign of the pressure on Gruenberg, Sheila Bair, who led the FDIC during the financial crisis, said in a post on X that Gruenberg should announce he’ll resign. “This controversy is hurting him and the agency,” she said.
The FDIC’s workplace issues have also shifted attention from a US regulatory plan to force big Wall Street banks to hold more capital. Lenders have vigorously lobbied against the proposal. A resignation by Gruenberg, who backs tougher capital requirements for banks, would further cloud the outlook for finalizing the regulation before November’s US elections.
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