FDIC Chair Martin Gruenberg to resign after workplace harassment probe

Federal Deposit Insurance Corporation Chairman Martin Gruenberg announced Monday that he will resign, after a recent probe found a widespread culture of sexual harassment and discrimination at the independent agency.

“In light of recent events, I am prepared to step down from my responsibilities once a successor is confirmed,” Gruenberg said in a statement. “Until that time, I will continue to fulfill my responsibilities as Chairman of the FDIC, including the transformation of the FDIC’s workplace culture.”

Following Gruenberg’s announcement, Deputy White House Press Secretary Sam Michel said President Joe Biden would “soon” name his nominee for the position.

“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,” Michel said.

The announcement follows an earlier statement from Sen. Sherrod Brown, D-Ohio, who Monday morning called on Biden to “immediately nominate a new Chair” and said the Senate should “act on that nomination without delay.”

There “must be fundamental changes at the FDIC,” Brown, who chairs the Senate Committee on Banking, Housing, and Urban Affairs, said in a statement. “Those changes begin with new leadership, who must fix the agency’s toxic culture and put the women and men who work there – and their mission – first.”

With his statement, Brown broke from fellow Democrats, who largely condemned the allegations but refrained from pushing for Gruenberg’s resignation, instead calling for him to drive changes at the agency.

Law firm Cleary Gottlieb in April released a scathing report detailing an alleged culture of “sexual harassment, discrimination, and other interpersonal misconduct” at the FDIC.

The 174-page report, which drew from accounts of more than 500 people, also included, in part, allegations of Gruenberg’s short temper, accusing him of engaging in bullying and verbal abuse. Employees described the chairman as “aggressive” and “harsh,” according to the report. In one instance, Gruenberg allegedly screamed profanities at employees after they delivered bad news, the report said.

“For far too many employees and for far too long, the FDIC has failed to provide a workplace safe from sexual harassment, discrimination, and other interpersonal misconduct,” the report said.

Investigators said that while Gruenberg’s alleged behavior is not the “root cause” of misconduct at the FDIC, “we do recognize that, as a number of FDIC employees put it in talking about Chairman Gruenberg, culture ‘starts at the top.'”

Gruenberg on May 15 testified before the House Financial Services Committee, where he apologized for the misconduct at the agency and pledged to implement the report’s recommendations.

Republicans were quick to call for Gruenberg’s removal following the report’s release, while Democrats were restrained in their criticism of the chairman. Gruenberg, a Democrat, was nominated by Biden for the position in 2022.

If Gruenberg were to leave the agency before his replacement is confirmed, it would leave the FDIC’s Board of Directors politically deadlocked with two Democrats and two Republicans, jeopardizing the Biden administration’s financial reform agenda.

According to the FDIC’s bylaws, Vice Chairman Travis Hill, a Republican, would assume the chairman’s responsibilities if the position became vacant.