NEW YORK — Martin Gruenberg, the chairman of the Federal Deposit Insurance Corporation, will leave his post once a successor is named, the White House said Monday.
Gruenberg’s announced departure comes after a scathing report on the agency’s toxic workplace culture was released earlier this month and political pressure from the top Democrat on the Senate Banking Committee, which called for his resignation earlier in the day.
In a statement, the White House said President Joe Biden will appoint a replacement for Gruenberg “soon” and called on the Senate to quickly confirm the person’s nomination.
THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.
The most powerful Democrat in Congress on banking and financial issues on Monday called on President Joe Biden to remove the chairman of the Federal Deposit Insurance Corp. to replace it, saying the agency is broken and that “fundamental changes need to happen at the FDIC.”
This follows a scathing report on the agency’s toxic workplace culture released earlier this month and FDIC Chairman Martin Gruenberg’s failure to convince Congress in testimony last week that he has the ability to change the agency despite the report that says Greunberg himself was often the source of the problems.
“After chairing last week’s hearing, reviewing the independent report, and receiving further assistance from FDIC staff to the Banking and Housing Committee, I can only draw one conclusion: fundamental changes must occur at the FDIC.” , said Sen. Sherrod Brown, D.-Ohio, and chairman of the Senate Banking Committee.
Until Monday, no Democrats had called for Gruenberg’s replacement, although several Democrats came very close to doing so in their own statements. Brown’s statement will likely lead to other Democrats now calling for Gruenberg’s removal.
In his statement, Brown did not call for Gruenberg’s resignation. He is in the middle of his six-year term as chairman of the FDIC, and if Gruenberg were to step down, Vice Chairman Travis Hill, a Republican, would lead the agency. Brown instead called on President Biden to “without delay” appoint a new chairman for the FDIC, which the Senate would then confirm.
Republicans have been calling for Gruenberg’s resignation for some time. During Thursday’s hearing, Sen. Tim Scott, R-S.C. and the top Republican on the committee, have detailed several stories of female FDIC employees outlining extreme harassment and stalking by their coworkers, complaints that were dismissed by regulators, according to the report.
“Marty – you heard me say this directly to you – you need to resign,” Scott said. “Your employees don’t trust you. And this is not a single incident. This spans over a decade of your leadership at the FDIC.”
Scott, who called for Gruenberg’s resignation in December when the first allegations were made public, is now calling on the Banking Committee to hold a separate hearing on the FDIC’s workplace issues.
Gruenberg has been involved in various levels of leadership at the FDIC for nearly two decades, and this is his second full term as chairman of the FDIC. His long tenure at the agency at the highest levels of power has made him largely responsible for the agency’s toxic work environment, according to the independent report outlining problems at the agency.
The report was released on Tuesday by law firm Cleary Gottlieb Steen & Hamilton cites incidents of stalking, harassment, homophobia and other labor code violations, based on more than 500 employee complaints.
Complaints included a woman who said she was stalked and persistently harassed by a co-worker even after she complained about his behavior; a field office supervisor who calls gay men “little girls”; and a female field investigator who described receiving a photo of the genitals from an FDIC senior examiner.
The FDIC is one of several regulators of the banking system. The Great Depression-era agency is best known for running the nation’s deposit insurance program, which insures Americans’ deposits of up to $250,000 in case their bank fails.
Sheila Bair, who chaired the FDIC during the 2008 financial crisis and was one of the administration’s most prominent voices at the time, posted on Twitter on Monday that it would be best for the agency if Gruenberg resigned.
“This controversy hurts him and his freedom of choice. “For his own good and for everyone at the FDIC, he should announce his intention to resign effective upon appointment,” she said.
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AP reporter Fatima Hussein of the Treasury Department contributed to this report from Washington.