White House says FDIC chairman will resign following report on agency’s ‘toxic culture’

NEW YORK — Martin Gruenberg, president of the Federal Deposit Insurance Corporation, will step down once a successor is named, the White House said Monday.

Gruenberg’s announced departure comes after a scathing report about the agency’s toxic workplace culture was released earlier this month and political pressure from the top Democrat on the Senate Banking Committee, who called for his resignation earlier in the day.

In a statement, the White House said President Joe Biden will name a replacement for Gruenberg “soon” and called on the Senate to quickly confirm the person’s nomination.

THIS IS A BREAKING NEWS UPDATE. The previous AP story follows below.

The most powerful Democrat in Congress on banking and finance issues has called on President Joe Biden to replace the chairman of the Federal Deposit Insurance Corp. on Monday, saying the agency is bankrupt and that there must be “fundamental changes at the FDIC.”

This comes after a scathing report about the agency’s toxic workplace culture was released earlier this month and FDIC Chairman Martin Gruenberg’s inability to convince Congress in testimony last week that he is capable of change the agency, despite the report saying that Greunberg himself was often the source. of the problems.

“After chairing last week’s hearing, reviewing the independent report, and receiving increased outreach from FDIC officials to the Banking and Housing Committee, I have come to one conclusion: There must be fundamental changes at the FDIC,” said Sen. Sherrod Brown, D. -Ohio and chairman of the Senate Banking Committee.

As of Monday, no Democrat had called for Gruenberg’s replacement, although several came very close to doing so in their own statements. Brown’s statement will likely prompt other Democrats to now call for Gruenberg’s removal.

In his statement, Brown did not call for Gruenberg’s resignation. He is midway through his six-year term as chairman of the FDIC and if Gruenberg were to resign, Vice Chairman Travis Hill, a Republican, would lead the agency. Instead, Brown called on President Biden to nominate a new chairman of the FDIC “without delay,” which the Senate would then confirm.

Republicans have been calling for Gruenberg’s resignation for some time. At Thursday’s hearing, Sen. Tim Scott, R-S.C. and the committee’s top Republican detailed several stories from female FDIC employees who described extreme harassment and stalking by their coworkers, complaints that were dismissed by supervisors, according to the report.

“Marty – you heard me say this directly to you – you should resign,” Scott said. “Your employees don’t trust you. And this is not a unique incident. This spans more than a decade of his leadership at the FDIC.”

Scott, who called for Gruenberg’s resignation in December when the initial 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 20 years, and this is his second full term as chairman of the FDIC. His long tenure at the agency, at the highest levels of power, made him largely responsible for the agency’s toxic work environment, according to the independent report outlining problems at the agency.

The report released Tuesday by law firm Cleary Gottlieb Steen & Hamilton cites incidents of stalking, harassment, homophobia and other violations of labor regulations, based on more than 500 employee complaints.

The complaints included a woman who said she was stalked by a co-worker and continually harassed even after complaining about his behavior; a field office supervisor referring to gay men as “little girls”; and a field examiner who described receiving a photo of her private parts from a senior FDIC examiner.

The FDIC is one of several regulators of the banking system. The Great Depression-era agency is best known for managing 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 government’s most prominent voices at the time, posted on Twitter on Monday that it would be better for the agency if Gruenberg resigned.

“This controversy is hurting him and his agency. For his own sake and that of everyone at the FDIC, he should announce his intention to resign upon appointment,” she said.

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AP Treasury Department reporter Fatima Hussein contributed to this report from Washington.