Federal Deposit Insurance Corporation Chairman Martin Gruenberg announced Monday that he will resign, after a recent probe found a widespread culture of sexual harassment and discrimination at the independent agency.<\/p>\n
\u201cIn light of recent events, I am prepared to step down from my responsibilities once a successor is confirmed,\u201d Gruenberg said in a statement. \u201cUntil that time, I will continue to fulfill my responsibilities as Chairman of the FDIC, including the transformation of the FDIC\u2019s workplace culture.\u201d<\/p>\n
Sen. Sherrod Brown, D-Ohio, on Monday called on President Joe Biden to replace Federal Deposit Insurance Corporation Chairman Martin Gruenberg after allegations of widespread sexual harassment and misconduct within the agency.<\/p>\n
There \u201cmust be fundamental changes at the FDIC,\u201d Brown, who chairs the Senate Committee on Banking, Housing, and Urban Affairs, said in a statement. \u201cThose changes begin with new leadership, who must fix the agency\u2019s toxic culture and put the women and men who work there \u2014 and their mission \u2014 first.\u201d<\/p>\n
\u201cThat\u2019s why I\u2019m 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,\u201d Brown continued.<\/p>\n
With his statement, Brown broke from fellow Democrats, who have largely condemned the allegations but refrained from pushing for Gruenberg\u2019s resignation, instead calling for him to drive changes at the agency. Brown\u2019s statement could signal the beginning of the end for the FDIC\u2019s top regulator, who was nominated for the position in 2022 by Biden.<\/p>\n
Law firm Cleary Gottlieb in April released a scathing report detailing an alleged culture of \u201csexual harassment, discrimination, and other interpersonal misconduct\u201d at the FDIC.<\/p>\n
The 174-page report, which drew from accounts of more than 500 people, also included, in part, allegations of Gruenberg\u2019s short temper, accusing him of engaging in bullying and verbal abuse. Employees described the chairman as \u201caggressive\u201d and \u201charsh,\u201d according to the report. In one instance, Gruenberg allegedly screamed profanities at employees after they delivered bad news, the report said.<\/p>\n
\u201cFor far too many employees and for far too long, the FDIC has failed to provide a workplace safe from sexual harassment, discrimination, and other interpersonal misconduct,\u201d the report said.<\/p>\n
Investigators said that while Gruenberg\u2019s alleged behavior is not the \u201croot cause\u201d of misconduct at the FDIC, \u201cwe do recognize that, as a number of FDIC employees put it in talking about Chairman Gruenberg, culture \u2018starts at the top.\u2019\u201d<\/p>\n
The investigators added in the report that \u201cGruenberg\u2019s reputation raises questions about the credibility of the leadership\u2019s response to the crisis and the \u2018moral authority\u2019 to lead a cultural transformation.\u201d<\/p>\n
When reached by CNBC, the FDIC declined to comment on Brown\u2019s call for Biden to replace Gruenberg.<\/p>\n
Brown did not call on Gruenberg to resign.<\/p>\n
Gruenberg on May 15 testified before the House Financial Services Committee, where he apologized for the misconduct at the agency and pledged to implement the report\u2019s recommendations.<\/p>\n
Republicans have been quick to call for Gruenberg\u2019s removal following the report\u2019s release, while Democrats have until now been more restrained in their criticism of the chairman, who is also a Democrat.<\/p>\n
If Gruenberg were to leave the agency before a replacement is confirmed, it would leave the FDIC\u2019s Board of Directors politically deadlocked with two Democrats and two Republicans, jeopardizing the Biden administration\u2019s financial reform agenda.<\/p>\n
According to the FDIC\u2019s bylaws, Vice Chairman Travis Hill, a Republican, would assume the chairman\u2019s responsibilities if the position became vacant.<\/p>\n<\/p>\n
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