FDIC Chair Gruenberg refuses to resign

U.S. Federal Deposit Insurance Corporation Chair Martin Gruenberg vowed to skeptical lawmakers Wednesday he would fix deep-seated cultural issues at his agency, as well as his own conduct.

But lawmakers expressed doubt that the bank regulator — who spent nearly two decades in leadership roles at the agency and was also the subject of some employee complaints about his temper — was fit for the job.

Testifying before Congress for several hours, Gruenberg was contrite both for failing to see widespread sexual harassment and other issues detailed in an independent report, as well as accounts of him losing his temper with subordinates. But he was resolute that he planned to stay at the agency and see changes implemented.

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“It’s incumbent on me to be more sensitive to how my conduct might be received by employees and to understand that the only thing that matters is not my perception, but their perception,” he said, adding later on that he would take an anger management course.

Gruenberg faced steady criticism from Republicans and Democrats, who expressed anger, dismay, and disbelief at the depths of the issues at the FDIC. Hundreds of employees reported mistreatment to an outside law firm hired following a November Wall Street Journal expose.

But while Republicans were quick to call for Gruenberg’s resignation or firing by President Joe Biden, Democrats were more measured. They expressed frustration at the agency’s woes and Gruenberg’s management but said they would like to give him the opportunity to fix them.

It was clear Gruenberg will be expected to show improvement at the agency.

“I am not satisfied by the answers you have given about how you plan to ensure that no FDIC employee has to go through something similar,” said Rep. Nydia Velazquez, a New York Democrat. “I am seriously questioning my confidence in your ability to change the culture of the FDIC and lead the agency going forward.”

The Biden administration’s efforts to impose stricter rules on the banking sector is closely tied to Gruenberg’s ability to stay at the FDIC. Should he leave the agency, it would be deadlocked with two Republican and two Democratic board members, and helmed by a Republican, Vice Chair Travis Hill.

The FDIC is working jointly with the Federal Reserve and Office of the Comptroller of the Currency on several pending regulatory projects, most notably a sweeping effort to overhaul how banks measure risk that would significantly boost capital requirements for big banks.

Gruenberg said he accepted all the recommendations of the independent review, including hiring a monitor to track the agency’s culture overhaul and a third-party expert to assist in that project. He also said the agency will create a new independent office of professional responsibility.

Gruenberg said the agency will pay closer attention to its 70 field offices, where some of the most egregious cases were reported.

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“We have a lot of work to do,” he said.