Congressional Democrats are in a tough spot.
Federal Deposit Insurance Corp. Chair Martin Gruenberg is under significant political pressure from Republicans to resign. That’s thanks to an independent third-party report that documented significant problems with the agency’s workplace culture and anti-harassment policies, as well as the chair’s own temper.
Gruenberg is — incidentally! — a crucial vote supporting the Biden administration’s financial policy agenda. And while key Democratic lawmakers say they’ll continue to support the embattled regulator, there are already signs of fracture among rank-and-file members.
Start with supporters: Top financial services Democrats like Sens. Sherrod Brown (Ohio), Elizabeth Warren (Mass.) and Rep. Maxine Waters (Calif.) are all backing Gruenberg.
Warren told us Tuesday night that Gruenberg was “clearly committed to accepting the recommendations of the independent investigation and to make changes at the FDIC.” The Massachusetts Democrat added “The problems with the FDIC date back to Democratic and Republican administrations going back many, many years.”
In an interview, Waters acknowledged some “legitimate criticism about management overall for some period of time.” But asked if Gruenberg should resign, the top Democrat on the House Financial Services Committee replied “Oh no. No, no, no.”
There are problems: We were interviewing Waters Tuesday night in the Capitol basement when Rep. Bill Foster (D-Ill.) approached the California Democrat to inform her he’d called for Gruenberg to resign minutes before. Foster is the top Democrat of the House Financial Services subcommittee on Financial Institutions and Monetary Policy.
Foster told Waters the allegations reported out by independent investigators at Cleary Gottlieb were “really bad.” Waters said: “Sounds like more mismanagement to me than misbehavior.”
Foster replied that “personal misbehavior” was “not what put it over the threshold for me.”
Foster isn’t alone among Democrats with concerns, publicly or privately. Rep. Gregory Meeks (D-N.Y.) suggested that Gruenberg would face credibility issues if he continued atop the FDIC:
Capitol Hill needs more time to digest the report in full. The majority of Democrats we asked for comment last night deferred, saying they hadn’t had a chance to read the investigation yet.
This isn’t likely to get better with time or closer inspection. “The summaries are not very pretty,” Rep. Brad Sherman (D-Calif.) said.
— Brendan Pedersen
