It’s bad enough that the Federal Deposit Insurance Corporation’s (FDIC) years-long push to impose more red-tape on banks and other lenders harms consumers by raising fees–that disproportionately hurt poor families. Now we learn the FDIC has also suffered from gross mismanagement, and leadership that turned a blind-eye to serious misconduct.
When you’ve got both the liberal New Republic magazine and conservative firebrand Sen. John Kennedy singing from the same song book, their tune is worth a listen.
Both voices from widely ideologically differing viewpoints are calling for Martin Gruenberg to resign his chairmanship of FDIC after a bombshell investigation by outside law firm Cleary Gottlieb corroborated Wall Street Journal reporting from last fall. The report, commissioned by the FDIC’s board of directors, found Gruenberg “failed to provide a workplace safe from sexual harassment, discrimination, and other interpersonal misconduct.” It is based on roughly 500 employee accounts of sexual harassment–nearly 10 percent of the FDIC staff.
Investigators also accused Gruenberg of mistreating his staff, including senior leaders, with behavior that was “extremely difficult and volatile,” creating “a patriarchal, insular, and risk-averse culture” with “widespread fear of retaliation.”
The report excoriates “a ‘good ol’ boys’ club where favoritism is common, wagons are circled around managers, and senior executives with well-known reputations for pursuing romantic relations with subordinates enjoy long careers without any apparent consequence.”
For anyone who cares about defending workplace integrity, especially for women, Gruenberg’s behavior is unacceptable. That’s why it’s disappointing that leading financial services Democrats including Sen. Sherrod Brown (Ohio) and women–who were vocal in decrying similar behavior during the #MeToo era–like Sen. Elizabeth Warren (Mass.) and Rep. Maxine Waters (Calif.), are giving Gruenberg cover. They prefer to blame Republican-appointed predecessors like former FDIC Chair Jelena McWilliams.
This defense rings hollow, given that Gruenberg spent nearly two decades at FDIC—including terms as acting chair starting in 2005, 2011, and 2022—displaying personal behavior the report characterized as “someone who was angry and upset and who could not control his temper” and personally made staff feel “unsettled, disturbed, and demeaned.” This is not a man with the character and ability to lead massive FDIC cultural reforms.
Indeed, the report quoted FDIC staff as believing Gruenberg’s leadership “‘presents unique challenges’ for him to lead the cultural and structural overhaul that it said is needed and questioned whether he has the ‘moral authority’ to do so.”
Remember, it was mere hours after he was sworn in that President Joe Biden said: “I’m not joking when I say this: If you’re ever working with me and I hear you treat another colleague with disrespect, talk down to someone, I promise you I will fire you on the spot. On the spot. No ifs or buts.”
We haven’t heard anything about this from Biden, which is why last week, House Oversight Committee Chairman James Comer (R-Ky.), Subcommittee on Health Care and Financial Services Chairwoman Lisa McClain (R-Mich.), and Rep. Andy Biggs (R-Ariz.) sent a letter to Biden requesting “all documents and communications related to the Biden Administration’s response to the allegations” against Gruenberg and questioned why Biden hasn’t fired him. Unfortunately, Biden’s acting Labor Secretary, Julie Su, when asked last week about Gruenberg’s behavior, declined to call for Gruenberg’s resignation.
Yet even as some progressives excuse Gruenberg, there’s additional bipartisan support for Gruenberg’s pink slip. House Financial Services Committee Chair Patrick McHenry (R-N.C.) said last week “it’s time for Chair Gruenberg to step aside.” Rep. Bill Foster (D-Ill.), ranking member of the Financial Services subcommittee on financial institutions, also called for Gruenberg to step down.
Senate Banking Committee ranking member Tim Scott (R-S.C.) repeated his call for Gruenberg’s resignation that Scott first made in December after the initial Cleary Gottlieb investigation triggered. Rep. Gregory Meeks (D-N.Y.) told Punchbowl News, “I just don’t see how he can lead any more.” Meeks is right.
Other Biden administration bullies have resigned, including Eric Lander, Biden’s former top science adviser, who quit in 2022 after allegations of him bullying and mistreating subordinates. Biden’s former White House deputy press secretary, TJ Ducklo, resigned in 2021 after threatening a journalist asking questions about Ducklo’s personal relationship with another reporter.
A spokesman for FDIC declined my request for comment but pointed me to a statement released Tuesday with Gruenberg’s profuse apology “for any shortcomings on my part” and claims he’ll institute reforms.
This weak mi culpa for “any shortcomings”? That’s what Miss Manners’ finishing school is for–not rampant misogyny, moral failures and verbal abuse that distract from governance. It’s time for Gruenberg to pack his bags and retire.