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Embattled FDIC chair Gruenberg faces GOP pressure to resign

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“Marty Gruenberg should resign,” he added.

The Wall Street Journal on Monday reported that the agency has for years been plagued by a culture of sexism and sexual harassment that has led female employees to quit. The paper late Wednesday published a story citing current and former FDIC officials that said Gruenberg and top deputies were involved in decisions over alleged sexism and racial discrimination in which the agency didn’t take a hard line. It also reported that Gruenberg is known for having an “explosive temper.”

The FDIC on Thursday subsequently canceled an open meeting of its board of directors, saying members would instead submit their votes in written form. Shortly afterward, the GOP members of the board put out a statement saying the news articles undermined public confidence in the agency.

“This has been a difficult week for the FDIC,” Vice Chair Travis Hill and board member Jonathan McKernan said in the statement. “Restoring faith in the work environment at the FDIC will be challenging.”

Lawmakers had pressed Gruenberg on the allegations in oversight hearings on Tuesday and Wednesday.

Gruenberg said harassment and discrimination are “unacceptable” and told lawmakers on Tuesday that an independent firm would conduct a “top-to-bottom assessment” of the agency. He said he had been unaware of the allegations of workplace problems at the agency prior to the Journal’s reporting.

“It’s quite clear that we’ve had employees at the FDIC subjected to horrendous experiences that simply are unacceptable and can’t be tolerated,” the FDIC chief testified. “It’s really going to be incumbent upon the agency to take all actions necessary to come to grips with this and to address it effectively.”

In their statement, the FDIC’s GOP members said Gruenberg and the general counsel, who is also implicated in the reports, should recuse themselves fully from the independent review and that the board, rather than management, should direct the inquiry.

The White House on Thursday said it supports the probe.

“Any reports of sexual harassment and discrimination are unacceptable, and we support the FDIC’s decision to conduct a thorough investigation,” said an official who declined to be named. “I would refer you to the FDIC for anything further.”

Rep. Bill Foster (D-Ill.) similarly said these are “serious allegations that must be investigated and those responsible should be held accountable.”

McHenry in a separate statement stopped short of calling for Gruenberg to step down but said he “never should have been reappointed or confirmed in the first place.” McHenry said his committee will conduct a “rigorous investigation,” including hearings and transcribed interviews.

“Under his leadership, the FDIC is at best preoccupied with this sideshow and at worst compromised,” McHenry said in a statement. “Chair Gruenberg clearly bears responsibility as these allegations occurred during his tenure as either a board member or chairman. There is no excuse for this alleged behavior, which is why the [FDIC] Inspector General must brief the Committee as soon as possible.”

The agency watchdog in 2020 found the FDIC did not have an incentive system in place to encourage employees and managers to create “a culture in which harassment is not tolerated” and to report and investigate complaints.

Gruenberg on Wednesday was forced to backtrack after telling the House Financial Services Committee that he himself had never been investigated for workplace misconduct.

“You asked me a question earlier,” Gruenberg told McHenry, reportedly after Journal reporters contacted the agency for comment. “For clarification, in 2008, I was interviewed pursuant to a review done in response to a concern raised by an employee, and I’m not aware of anything that came out of that review.”

An FDIC spokesperson said the board would proceed with a vote that had been scheduled for the meeting Thursday, on whether to approve a final rule that would charge big banks an additional fee to shore up its deposit insurance fund following losses from two regional lenders earlier this year.


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