Yahoo Finance FDIC's Gruenberg rebuffs bipartisan calls for his resignation as new banking rules loom
FDIC Chair Martin Gruenberg rebuffed bipartisan calls to resign during a heated House hearing Wednesday as lawmakers pressured him about a report that revealed a toxic workplace riddled with sexual harassment, bullying, and other misconduct.
The bank regulator said he accepted the findings of the 234-page independent review, which was commissioned by the FDIC following stories about its workplace published last year by the Wall Street Journal.
The report, which was handled by law firm Cleary Gottlieb Steen & Hamilton, also showed instances of anger from Gruenberg that alarmed colleagues.
"As chairman, I take full responsibility," Gruenberg said in testimony before the House Financial Services Committee.
"To anyone who has experienced sexual harassment, discrimination, or other misconduct at the FDIC, I again want to apologize and express how deeply sorry I am," he added.
"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 deeper cultural issues at the FDIC sooner."
The FDIC boss made it clear he wants to help the agency fix its problems by remaining in charge. His words did little to satisfy many Republicans and Democrats on the House committee who took turns during the nearly four-hour-long hearing questioning Gruenberg's leadership.
Committee Chair Patrick McHenry said that he is not the right person to fix the FDIC's workplace culture.
"You have failed your employees, your agency, and the American people," said McHenry.
"The fact that you have yet to resign proves you take no responsibility for your actions. And let me be clear, showing up today is not an act of courage, it’s an act of hubris."
The scrutiny on Gruenberg comes at a critical time as regulators push for a sweeping overhaul of how banks are regulated in the wake of last spring's regional bank crisis.
Last July, US banking regulators proposed raising capital requirements for banks by an aggregate 16%, widening the scope of the new rules to include banks with as low as $100 billion in assets.
Officials argued the changes were needed to make banks stronger and better prepared for shocks like the crisis of this spring, when the failures of Silicon Valley Bank, Signature Bank, and First Republic triggered deposit withdrawals.
Banks, their lobbyists, and some Republican lawmakers argue the proposal would curb lending and hurt the economy.
Even Fed Chair Jay Powell has hinted at reservations about the capital proposal and its impact and said that he expects changes to be made.
Michael Barr, the Fed's vice chairman for supervision, also said Wednesday that he expects "broad, material changes" to the proposal.
Among the House lawmakers who called for Gruenberg's resignation Wednesday was Rep. Ann Wagner (R-Mo.).
"Your employees have lost confidence in you, sir," she said. "I have lost confidence in you and Congress has lost confidence in you. You, sir, should be fired. Not resigned, fired, Mr. Chairman."
But some Democrats were equally critical.
Democratic Congressman Ritchie Torres asked Gruenberg to consider whether the chairman would have asked for his resignation if their roles were reversed and "you were a congressman on the House Financial Services Committee and I was the chair of the FDIC under the cloud of a scandal."
"No, Congressman," Gruenberg replied.
A Democratic congressman from New York, Greg Meeks, said he was "pissed off" that employees suffered from racial and gender discrimination, bullying, mistreatment, and harassment at the FDIC for years.
He questioned how trust and credibility could be restored under current leadership.
"Not a single one resulted in a removal or reductions in pay grade or any discipline more serious than a mere suspicion," said Meeks. "If I was me in my office, I'd probably be run out."
Gruenberg did get some support Wednesday from one of his fellow regulators, acting Comptroller of the Currency Michael Hsu, who co-chaired a special committee that oversaw the external investigation.
Hsu was asked whether he had experienced Gruenberg’s anger, to which Hsu replied, "Passioned but not heated."
Hsu said he thought Gruenberg was capable of resolving workplace culture issues at the FDIC.
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