Follow TopicFollow Contributor Share Feedback
Congressional Hearings to Decide US FDIC Chair's Fate

Congressional Hearings to Decide US FDIC Chair's Fate

by Starling Insights

Starling Insights Editorial Board

May 14, 2024


US Federal Deposit Insurance Corporation (FDIC) Chair Martin Gruenberg is due to testify before the US Senate and US House of Representatives this week. The Wall Street Journal and others have speculated that his response to questions regarding the scathing independent review of the FDIC's culture published last week will likely decide his fate as leader of the agency.

The FDIC commissioned the report from law firm Cleary Gottlieb following a bombshell WSJ report detailing allegations of widespread sexual harassment and discrimination at the agency. Alongside verifying these claims and painting a rather grim portrait of life at the FDIC, the report also outlined incidents of allegedly "volatile" behavior from Gruenberg, who has been accused of having a short temper.

The hearings are sure to be politically contentious. Republicans, unsurprisingly, have called for Gruenberg's resignation with vigor. Democrats, however, have been far more hesitant to make a public statement one way or the other. 

Were Gruenberg to step down from the FDIC, Republican Vice-Chair Travis Hill would presumably take the reins, the WSJ explains, likely dooming the Biden administration's controversial bank capital reform. However, in an election year, President Biden is also loath to be seen as tolerant of sexual harassment and workplace misconduct, they write, as it is a problem he has railed against in other circumstances.

Whether Gruenberg steps down or not, guiding the FDIC through this transformation will require more than simply updating policies and adding additional training. It must not only reform its culture and governance processes, but it must also find a way to evidence to its employees and to the public that meaningful change has taken place. And, in an article published last week, Starling Founder & CEO Stephen Scott argued that such a transformation is unlikely to be successful if it relies too strongly on the "Enron-era" reforms recommended in the Cleary Gottlieb report.

"The litmus test question to be answered in circumstances such as those currently faced by the FDIC is this: what will help us to evidence our trustworthiness most sustainably?" he wrote. "The FDIC has yet to put forward a compelling answer to that question, and the Clearly Gottlieb report offers little help." ▸ Read More

Join The Discussion

See something that doesn't look quite right?

We strive to provide high quality and accurate content at all times. With that said, we realize that sometimes links break, new information becomes available, or there is something that you feel we may have missed.

If you see something that you think we should be aware of, we would love to hear from you. Feel free to drop us a note below and leave your name and contact info if you'd like to hear back from us.

Thank you for being a key part of the Starling Insights community!