November 15, 2023
‘We’re watching,’ Brown sets a high bar for FDIC workplace reform
The Democratic chair of the Senate Banking Committee says he’ll be sharply scrutinizing efforts at the Federal Deposit Insurance Corp. to address reports of rampant sexual harassment at the agency’s regional hubs.
Sen. Sherrod Brown (D-Ohio) hosted four of the Biden administration’s federal bank regulators Tuesday for a semi-regular oversight hearing. As expected, we heard a lot about capital reform.
But senators from both parties dedicated as much time — if not more — to grilling FDIC Chair Martin Gruenberg over a Wall Street Journal investigation published this week detailing a “toxic” culture among certain regional offices. Gruenberg said he was “personally disturbed and deeply troubled” by the story.
Catching up with Brown after the hearing, we asked whether the Ohio Democrat was satisfied with Gruenberg’s answers to senators’ questions. Brown replied that Gruenberg “said the right words.”
But Brown also made clear his committee would expect more than verbal contrition in the weeks ahead.
“He’s got to live up to what he said. You can’t be satisfied — with problems that deep — in the words,” Brown said. “We will continue to watch, and we’ll continue to let him know we’re watching.”
The House Financial Services Committee is also watching. Lawmakers requested a briefing from the FDIC’s inspector general earlier this week on the matter.
A quiet agency in the absence of a financial crisis, the FDIC has been subject to increased political scrutiny in recent years. Republican lawmakers still haven’t forgotten the ouster of former Chair Jelena McWilliams, a Trump-era appointee who resigned shortly after Biden-appointed members of the FDIC board attempted to push policy without her approval.
The FDIC also played a crucial role in the March banking crisis and the resolution of failed regional institutions including First Republic Bank and Silicon Valley Bank. Lawmakers, particularly Democrats, have criticized the policies that allowed megabank JPMorgan Chase to purchase First Republic.
But the FDIC’s sexual harassment scandal poses a particular political danger to Gruenberg. These workplace problems “stretch back more than a decade,” the Journal wrote. Meanwhile, the former Senate banking staffer has served on the FDIC’s board since 2005 — including several stints as both acting and Senate-confirmed chair.
Suffice it to say, no one in Washington can claim they have more experience leading the FDIC than Gruenberg, even if the agency’s problems have mostly festered away from the nation’s capital. For lawmakers, that means he’ll have a tougher, higher bar to clear. “He’s got to step up and fix it, period,” Brown said.
The FDIC declined to comment.
— Brendan Pedersen
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