Federal Deposit Insurance Corp Chair Martin Gruenberg announced his resignation on Monday, finally succumbing to a months-long scandal over sexual harassment and other misconduct at the top bank regulator.
Gruenberg said he would step down from his responsibilities once a successor is confirmed.
The White House will nominate a replacement for Gruenberg, White House deputy press secretary Sam Michel said in a statement. Gruenberg’s five-year terms ends in 2028.
Earlier in the day a top Democrat had called for the FDIC chair to be replaced after an external review found sweeping reports of employee mistreatment and sexual harassment.
There must be “fundamental changes” at the agency, Senate Banking Committee Chairman Sherrod Brown said in a statement, adding that he wanted President Joe Biden to immediately nominate a replacement, which the Senate should quickly advance. Brown is the most senior Democrat to call for Gruenberg’s replacement, ramping up pressure on the FDIC chairman.
Gruenberg, 71, had been at the FDIC since 2005 and is the longest FDIC board member in the agency’s 89-year history. During that time he served as its chair twice – once under President Barack Obama and the second under Joe Biden.
The departure of Gruenberg, a Democrat and Wall Street critic who had been a senior leader at the FDIC for nearly two decades, comes at a critical time for the agency – just a year after three major banks failed and as many lenders continue to struggle amid elevated Federal Reserve interest rates.
Last week, Gruenberg testified alongside several other banking regulators before Congress. He vowed to take steps to address longstanding cultural issues at the agency, as well as his own personal conduct, after the review found multiple instances in which he lost his temper with subordinates.
But Republicans and Democrats alike expressed skepticism that Gruenberg would be able to overhaul the agency, where he has served for nearly two decades. He was sworn in to his current five-year term as chair of the FDIC in January 2023. He had also served as chairman from November 2012 to mid-2018.
“After chairing last week’s hearing, reviewing the independent report, and receiving further outreach from FDIC employees to the Banking and Housing Committee, I am left with one conclusion: there must be fundamental changes at the FDIC. Those changes begin with new leadership,” Brown said in his statement.
The FDIC is working with the Federal Reserve and the Office of the Comptroller of the Currency on several rulewriting projects that would tighten requirements on larger banks, including a contentious plan to boost big bank capital requirements.
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