FDIC Chair Resigns Amid Widespread Sexual Harrassment Allegations at the Agency

The Chairman of the Federal Deposit Insurance Corporation (FDIC) is resigning following an investigation that revealed widespread sexual harassment, discrimination and bullying.

Martin Gruenberg will stay in his post until Joe Biden names and confirms a successor. That decision drew heat from Republicans because if Gruenberg were to leave his post immediately, Vice Chairman Travis Hill, a Republican, would assume the chairmanship.

Trying to confirm a new chairman in an election year in a polarized Senate may not be possible. This doesn't sit well with FDIC employees pushing back against Gruenberg's "cultural transformation" efforts at the agency. They want immediate action to address their numerous complaints.

Bipartisan calls for Gruenberg to step down followed a pair of congressional hearings last week that showed the chairman unable to defend many of the charges against him.

“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,” said White House Deputy Press Secretary Sam Michel.

South Carolina Senator Tim Scott strongly objected to Gruenberg's slow-motion resignation.

“This draw-it-out strategy makes it clear that this administration is prioritizing their political agenda over protecting workers,” he said.

The law firm of Cleary Gottlieb released a 234-page report earlier this month that described a “patriarchal, insular, and risk-averse culture” at the agency, where responses to allegations of wrongdoing have been “insufficient and ineffective.”

But it was the hearings on the Hill that sealed Gruenberg's fate.

Wall Street Journal:

Then, last week, Gruenberg faced two rocky hearings on Capitol Hill, where he was grilled by lawmakers of both parties over his handling of harassment allegations at the agency as well as allegations of his own temper.
Rep. Ayanna Pressley, a Massachusetts Democrat, said she didn’t have confidence that Gruenberg could continue to lead and described the agency’s policies for addressing harassment as a “cataclysmic failure” and an “affront” to women who had been driven out of the agency. Rep. Gregory Meeks (D., N.Y.) said, “If it was me in my office, I’d probably be run out.”
Sen. John Kennedy (R., La.) told Gruenberg: “You ought to be ashamed of yourself.”
Gruenberg took responsibility for the culture and apologized, while vowing to make changes at the agency.

Gruenberg's own staff turned on him and lobbied Congress for his ouster. Despite all of this — the allegations, the embarrassing hearing, and calls from far and wide within the agency — Gruenberg will stay on for an unlimited time until Biden gets around to naming someone who can be confirmed in a divided Senate.

The push for Gruenberg to stay in his role until a successor is confirmed drew skepticism on Capitol Hill and from some FDIC employees, who said the announcement could allow Gruenberg to continue in his role for months while alleviating some of the political pressure on Democrats. Confirming a new chairman in an election year could be challenging for Congress, and finding a nominee who is neither too moderate nor too progressive for Democrats to support could be particularly difficult.

The FDIC is in the middle of developing new banking regulations that are supposed to shore up the financial stability of several mid-size banks, but many Republicans and larger banks see them as unnecessary and intrusive.

The regulations will likely be finalized late in the year. At that point, several larger banks will likely sue the agency to stop them.