Senate Banking Chair Brown Calls On Biden To Replace Embattled Fdic Head

Senate Banking Chair Sherrod Brown on Monday called on President Joe Biden to replace FDIC Chair Martin Gruenberg, after damning reports of a toxic workplace culture at the bank regulator where Gruenberg has served for nearly two decades.

Brown in a statement said there must be “fundamental change” at the FDIC, which insures more than $10 trillion in bank deposits and oversees thousands of financial institutions, in a move that is likely to turn the tide against the agency head with other Democrats as well.

“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,” he said. “That’s why I’m calling on the President to immediately nominate a new Chair who can lead the FDIC at this challenging time and for the Senate to act on that nomination without delay.”

Brown’s statement is a break with Sen. Elizabeth Warren (D-Mass.) who has said she has confidence in Gruenberg’s ability to effect change. Gruenberg testified at hearings before House and Senate lawmakers last week, where Democrats stopped just shy of calling for the agency head’s ouster.

“I expect that the entire Banking and Housing Committee and Senate leaders, in both parties, will put politics aside and join this effort to bring new leadership to the agency to ensure a safe workplace for the women and men who protect our financial system,” Brown said in his statement.

Notably, the senator did not call on Gruenberg to resign. The FDIC chair almost exclusively directs staff work and sets priorities for regulation, and if Gruenberg were to depart, the agency would be led on an acting basis by its Republican vice chair, Travis Hill. The course of action laid out by the senator would allow control of the agency to pass to another Democrat, who would be tasked with fixing the internal culture at the bank regulator.

An independent report released by law firm Cleary Gottlieb Steen & Hamilton said the top bank regulator needs “cultural and structural change” and questioned whether Gruenberg was the right person to lead those reforms, citing incidents of him “losing his temper and interacting with staff in a demeaning and inappropriate manner.”

The report comes as the FDIC and other Biden-era regulators are seeking to finalize a series of tougher regulations against banks.