Subscriber Benefit
As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe Now
Martin Gruenberg, chair of the Federal Deposit Insurance Corp., announced Monday that he would resign once President Biden appoints and the Senate confirms a successor to lead the banking regulator, after a searing report said Gruenberg led a hostile workplace at the agency.
An independent investigation led by an outside law firm found rampant instances of abusive workplace conduct at the FDIC, including sexual harassment, stalking and inappropriate supervisor-subordinate relationships, and it cast doubt on Gruenberg’s ability to continue to lead the agency.
“These incidents, and many others like them, did not occur in a vacuum. They arose within a workplace culture that is ‘misogynistic,’ ‘patriarchal,’ ‘insular,’ and ‘outdated’—a ‘good ol’ boys’ club where favoritism is common, wagons are circled around managers, and senior executives with well-known reputations for pursuing romantic relations with subordinates enjoy long careers without any apparent consequence,” stated the report, conducted by the law firm Cleary Gottlieb Steen & Hamilton.
Lawmakers last week grilled Gruenberg over the allegations. Back-to-back hearings in both the House and Senate, initially intended to address oversight of financial regulators, last week instead focused heavily on the culture at the FDIC and Gruenberg’s behavior. Multiple members of Congress, mostly Republicans, called for his resignation.
“Marty, you’ve heard me say this to you directly: You should resign,” Sen. Tim Scott (S.C.), the top Republican on the Senate Banking Committee, said during the hearing. “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.”
Sen. Sherrod Brown (D-Ohio), chair of the Banking Committee, called on Monday for “new leadership” at the FDIC to “fix the agency’s toxic culture and put the women and men who work there—and their mission—first.”
“In light of recent events, I am prepared to step down from my responsibilities once a successor is confirmed,” Gruenberg said in a statement Monday evening. “Until that time, I will continue to fulfill my responsibilities as Chairman of the FDIC, including the transformation of the FDIC’s workplace culture.”
Gruenberg has served as head or acting head of the agency for three stints since 2005, serving under then-presidents George W. Bush, Barack Obama and Donald Trump. Biden nominated him to lead the FDIC again in 2022.
“Some people are just not right for the roles in which they are cast, and he is one of those people,” Sen. Cynthia Lummis (R-Wyo.) told The Washington Post on Monday.
Gruenberg’s delayed resignation preserves Democrats’ majority on the FDIC’s board of directors; if Gruenberg resigned without an immediate replacement, the board would have been left with two Democrats and two Republicans.
“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 employees. The president will soon put forward a new nominee for FDIC chair who is committed to those values and to protecting consumers and ensuring the stability of our financial system, and we expect the Senate to confirm the nominee quickly,” acting deputy White House press secretary Sam Michel said in a statement.
A senior administration official said Biden is confident in Gruenberg’s ability to remain in the job for a short period, but not the long term. The official spoke on the condition of anonymity because they were not authorized to discuss the matter publicly.
White House officials want a successor for Gruenberg “who’s not been part of the current leadership structure” to clean up the workplace culture at the FDIC, the person said. And after last week’s hearings—and Brown’s statement Monday morning calling for a new chair—it became clear, the person said, that “there was no way the FDIC chair could stay until the end of the year.”
Please enable JavaScript to view this content.