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Martin Gruenberg

Congress isn’t getting less skeptical about FDIC replacement

In theory, Federal Deposit Insurance Corp. Chair Martin Gruenberg is on his way out of the agency. All we need is a successor, courtesy of the White House and Senate confirmation process.

This was never going to be easy. But this week, lawmakers are sounding doubtful that the Senate will confirm a successor this year.

“I don’t expect that we’ll actually get a replacement,” Sen. Mike Rounds (R-S.D.) said in an interview. “I think they knew from day one that this would be difficult to get done before his term expires — before we have a change in administration in January,” Rounds added, referring to a potential change in White House control next year.

The FDIC has been navigating a political crisis since April when an independent investigation corroborated reports of widespread sexual harassment and Gruenberg’s tendency to berate staff. Days after Gruenberg testified before Congress, the longtime regulator announced he’d resign from his post once the Senate confirms a successor.

Republicans have complained about Gruenberg’s exit strategy ever since. If he stepped down straight away, day-to-day control of the FDIC would fall to GOP appointee Travis Hill, the agency’s vice chair. The FDIC board would also be split 2-2 on partisan lines, halting the Democratic banking agenda.

That’s obviously something Democrats would like to avoid.

“You don’t have to be Mensa material to see what’s going on,” Sen. John Kennedy (R-La.) said. “The chairman made a big deal about saying he was going to resign, and that was reported. But the fine print is kind of important.”

On the House side, Rep. Bill Huizenga (R-Mich.) — who chairs the House Financial Services Subcommittee on Oversight and Investigations — claimed that Gruenberg’s continued leadership at the FDIC was further damaging staff morale.

Not just Republicans: Democrats we spoke to this week didn’t dispute the challenge of confirming a new FDIC chair before January.

“I don’t think it’s about Gruenberg. I think it’s just unlikely,” Rep. Sean Casten (D-Ill.) said. Casten added: “How often has the Senate jammed through confirmations at this point in the electoral cycle?”

When we asked Sen. Catherine Cortez Masto (D-Nev.) about the odds of confirmation, she winced a tad before saying: “I can never say it’s a definite, but I’m hopeful. Let me just say that.”

Sen. Jack Reed (D-R.I.) is more bullish. “It’s feasible,” the Rhode Island Democrat said. “It can be done.”

In the meantime, the status quo is fine for every Democrat we asked this week — even for the lone House Democrat to call for Gruenberg’s resignation, Rep. Bill Foster (D-Ill.).

“The important thing, from the point of view of getting cultural change in the FDIC, is that he’s on his way out,” Foster said. “It’s an acceptable situation that won’t be too disruptive in the ongoing business of the FDIC.”

— Brendan Pedersen

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