FDIC's chairman faces bipartisan criticism following a report about the agency’s toxic culture

Republican and Democratic members of Congress criticized Federal Deposit Insurance Corporation Chairman Martin Gruenberg’s leadership following the release last week of an independent report that found the banking regulator was rife with “sexual harassment, discrimination and other personal misconduct.” 

“Showing up today is not an act of courage. It’s an act of hubris,” House Financial Services Committee Chairman Patrick McHenry, R-N.C., told Gruenberg at Wednesday’s hearing. 

McHenry, as well as many Republicans on the panel and one Democratic member, have called on the chairman to resign. 

Gruenberg argued that changing leadership at the FDIC would not advance efforts to reform its workplace and apologized to agency employees who were sexually harassed or experienced other misconduct. 

“I also acknowledge my own failures as chairman both in failing to recognize how my temperament in meetings impacted others and for not having identified the deeper cultural issues at the FDIC sooner,” he said. 

The independent report by the law firm Cleary Gottlieb also discussed instances when Gruenberg — who has been a member of the FDIC Board since 2005, serving as chairman from 2012 to 2018 and again beginning in 2023 —- “[lost] his temper and [interacted] with staff in a demeaning and inappropriate manner.” 

Rep. Bill Huizenga, R-Mich., said the committee learned from its own investigation of FDIC’s workplace that before briefings senior leaders warn their staff about Gruenberg’s behavior.  

“Your staff also shared stories during their interviews [with us] that FDIC staff is known to cry after leaving meetings with you and that others described having to comfort colleagues after interacting with you,” he told Gruenberg. 

Discussion of the Cleary Gottlieb report dominated the hearing, which was titled “Oversight of Prudential Regulators” and also included testimony from Federal Reserve Vice Chairman for Supervision Michael Barr and Acting Comptroller Michael Hsu. 

Rep. Brad Sherman, D-Calif., requested a separate hearing exclusively on the report, to which Chairman McHenry agreed. 

House Financial Services Committee ranking member Maxine Waters, D-Calif., said she was disappointed in the FDIC chairman and found the report troubling. But she also criticized the independent investigation, arguing it focused too much on Gruenberg instead of longstanding workplace culture issues at the regulator. 

“The report seemed to downplay workplace concerns and complaints of harassment that occurred under prior Republican agency leadership,” she said. “Regardless, the FDIC as an institution has a lot of work to do.” 

Gruenberg detailed actions the FDIC is taking in response to the report’s recommendations, including hiring third parties to oversee their implementation and establishing an Office of Professional Conduct to handle misconduct complaints. 

However his responses did not satisfy many lawmakers, including Democrats. 

“What I don’t understand is, number one, how did it take place for all the years that it took place? And admittedly you were not the chairman the whole time, but you’ve been there forever,” Rep. Gregory Meeks, D-N.Y. told Gruenberg. “I would think that if someone would have seen that type of harassment, those types of activities taking place, somebody should stand up, especially if you’re in a leadership position, and say something.”

If Gruenberg departs, there would be a 2-2 split between Democrats and Republicans on the FDIC Board. 

“It is shameful that through your inadequate leadership at the helm of this agency that you have fueled calls for your resignation from the political opportunists across this aisle and jeopardized critical regulations pending finalization at your agency,” Rep. Ayanna Pressley, D-Mass., told Gruenberg. “Personally, I do not have confidence that you can continue to lead in this role.” 

Rep. Jim Himes, D-Conn., told Gruenberg that he had to earn back the trust of FDIC employees. 

“Sit with them and push for them that you’re the right leader. We don’t matter. There’s more than a whiff of politics up here right now,” he said. “If they’re not persuaded, I hope you’ll do the right thing.”