US FDIC needs ‘fresh start’ with new chair, White House official says
WASHINGTON — The White House believes the U.S. Federal Deposit Insurance Corp needs a “fresh start” with a new chair who is not part of the leadership that presided over its long-running cultural problems, a White House official told Reuters on Tuesday.
FDIC Chair Martin Gruenberg finally succumbed on Monday to a months-long scandal over sexual harassment at the agency, announcing that he would step down once the Senate has confirmed a successor, in a move that could kill bank capital hikes and other major Wall Street bank rules sought by Democrats.
Washington insiders and analysts said the White House is under pressure to quickly fill the role and preserve Democratic President Joe Biden’s financial regulation agenda just six months ahead of the U.S. presidential election.
They expect the White House would seek a female nominee already in government who would be better placed to overhaul the agency’s toxic culture and get through the nomination process faster.
“Assuming that the White House were to announce a nominee tomorrow to replace Mr. Gruenberg, the best it could hope for is a vote on the Senate floor in September,” Stifel Chief Washington Policy Strategist Brian Gardner wrote on Tuesday.
The administration is “very conscious” of the tight Senate calendar and wants to put a nominee in front of the Senate Banking Committee as soon as possible, said the official who spoke on the condition of anonymity.
Gruenberg, a Democrat, had clung to his job since the scandal erupted in November, despite many lawmakers demanding he step down. A Monday statement by top Democrat and Senate Banking Chair Sherrod Brown calling for fresh leadership appeared to tip the balance.
A top bank regulator, the FDIC faces a critical moment as regional banks remain under stress following last year’s turmoil, and as it finalizes capital hikes and other major new rules for Wall Street banks.
Under the law, the only way for the administration to replace Gruenberg without handing control of the agency to Republicans is to have the Senate, which Democrats control by one vote, confirm their new pick. But many Washington analysts believe Gruenberg may struggle to hold onto his job much longer, as Republicans continue to pile pressure on Biden to fire him.
A damning independent review this month found widespread misconduct at the FDIC went unaddressed for years, and cited instances in which Gruenberg — who has spent nearly two decades in leadership at the agency — lost his temper with subordinates.
