US Federal Deposit Insurance Corporation (FDIC) Chair Martin Gruenberg assured skeptical lawmakers on Wednesday that he would address deep-seated cultural issues within his agency and his own conduct.
FDIC Chair's Commitment to Address Cultural Issues
Lawmakers cast doubt on the suitability of the bank regulator for the job. He spent almost two decades in leadership roles at the agency and was also the subject of some employee complaints about his temper.
While Gruenberg expressed remorse for not recognizing the widespread sexual harassment and other issues outlined in an independent report, as well as for instances where he lost his temper with subordinates, he remained determined to remain at the agency and oversee the implementation of necessary changes, during several hours of testimony before Congress. Gruenberg acknowledged that it was important for him to be more aware of how employees might perceive his behavior and to recognize that their perception matters more than his own, mentioning he would even enroll in an anger management course to address this issue.
Lawmakers' Skepticism on FDIC Chair's Suitability
Gruenberg encountered consistent criticism from Republicans and Democrats, who expressed frustration, disappointment, and doubt regarding the extent of the issues within the FDIC, where hundreds of employees reported mistreatment to an external law firm hired to investigate the matter following a November Wall Street Journal expose.
While Republicans swiftly called for Gruenberg's resignation or termination by President Joe Biden, Democrats took a more cautious approach, expressing frustration with the agency's challenges and Gruenberg's leadership but indicating a willingness to afford him the chance to address and resolve the issues.
It became evident that Gruenberg would be under pressure to demonstrate improvement at the agency. Representative Nydia Velazquez, a New York Democrat, expressed dissatisfaction with Gruenberg's responses regarding his plans to prevent similar incidents at the FDIC and voiced serious doubts about his ability to reform and lead the agency's culture effectively.
The Biden administration's push for stricter regulations in the banking sector is closely linked to Gruenberg's tenure at the FDIC. His departure would result in a deadlock within the agency, with two Republican and two Democratic board members, and Vice Chair Travis Hill, a Republican, would lead the agency.
FDIC's Overhaul Initiative
The FDIC is collaborating with the Federal Reserve and the Office of the Comptroller of the Currency on various ongoing regulatory initiatives, most notably a comprehensive endeavor to revamp how banks assess risk, which would significantly increase capital requirements for large banks.
Gruenberg confirmed his acceptance of all the recommendations from the independent review, including the appointment of a monitor to oversee the agency's cultural overhaul and a third-party expert to assist with this initiative. He also announced plans to establish a new independent office of professional responsibility within the agency.
Gruenberg emphasized that the agency will increase its focus on its 70 field offices, where some of the most severe cases were reported, acknowledging that much work is needed to address these issues.
