Who could replace Martin Gruenberg at the FDIC?

May 21, 2024 12:46 PM

WASHINGTON — Martin Gruenberg's pending departure from the Federal Deposit Insurance Corp. will leave a large opening at the helm of bank regulation in Washington.

Gruenberg announced Monday that he would step aside from the FDIC once a successor is confirmed after roughly two decades at the agency, following a damning report that detailed a toxic workplace. Although Gruenberg wasn't found to be a key instigator of the worst behavior described in the report, it still raised questions about his temperament and ability to lead the agency through necessary reforms.

He lost the support of a key Senate Democrat, Sen. Sherrod Brown, who's running a tight reelection campaign in Ohio and who currently leads the Senate Banking Committee. Following the loss of Brown's backing, the White House said it would nominate a replacement.

Filling the top job at the FDIC will be a tough job for Brown and the White House, with few legislative days left to confirm a new chair before the 2024 presidential election. Republicans have been unusually successful in killing the nominations of the Biden administration's picks for top bank regulation posts, notably Saule Omarova and Mehrsa Baradaran at the Office of the Comptroller of the Currency.

The best case scenario for the Biden administration is someone who could get confirmed quickly, ideally along bipartisan lines, so that Gruenberg doesn't sit in a lame duck position until the election, as well as adding someone who could help the Biden administration fulfill a progressive financial policy agenda.

The list of candidates who could potentially do both is short.

Here's some of the top regulators, former regulators and other policymakers who could be tapped by the White House to fill Gruenberg's spot.

Sandra Thompson

Sandra Thompson, the current director of the Federal Housing Finance Agency, is an experienced regulator who also has deep ties to the FDIC.

Thompson served for more than 23 years at the FDIC, most recently in a high-ranking position of director of the division of risk management supervision. Her knowledge of the nuts and bolts of bank oversight and risk management could be a boon for an agency in disarray.

She left the FDIC in 2013 to become the deputy director of the Division of Housing Mission and Goals, a lateral position at best, before being elevated to acting director of the FHFA, eventually receiving Senate confirmation.

The drawbacks to a potential quick confirmation: In 2022 she received a narrow confirmation vote, 49-46. She would also leave another opening atop the FHFA that the Biden administration would have to fill.

Thompson has continued to make waves in the banking community after her time at the FDIC. She led a review of the Federal Home Loan banks, overseen by the FHFA, which came under scrutiny for potentially exacerbating issues in banks that eventually failed by providing emergency liquidity to them. The report that came of that review found that the Federal Home Loan banks should refocus on their core mission of affordable housing finance.

Adrienne Harris

Adrienne Harris, the head of the New York Department of Financial Services, is a state regulator with national policy chops.

Harris currently oversees one of the most important state-level posts in bank oversight, with jurisdiction over the country's most influential financial districts. She has also dipped her toes into national policy, pushing behind the scenes in Congress on a critical stablecoin bill that could have a massive influence on financial regulation.

Her state experience, and interest in the fintech and crypto industry, would make her an easier sell to Republicans. While the FDIC is meant to have at least one board member with state supervisory experience, that requirement is often ignored. If chosen, Harris would satisfy the industry players who have pushed to enforce the state supervisory experience requirement.

She also already serves on the Financial Stability Oversight Council, having joined the oversight body last year. That gives her insight and familiarity with the overarching financial priorities of the Biden administration and other major financial regulators.

The biggest issue with Harris' potential nomination could be her reluctance to take the job. It's less than six months until a potential administration change, and likely most of the work would focus on workplace culture rather than bank policy.

Harris was already a good candidate for the FDIC top job before the White House ultimately nominated Gruenberg earlier in the Biden administration. Her interest in the crypto industry and legislation that would regulate it also throws up additional obstacles with the progressive wing of the Democratic party, notably Sen. Elizabeth Warren, D-Mass., who has wielded outsize influence on financial regulation nominations in the past.

Graham Steele

The former assistant secretary for superintendent of financial services at the Treasury Department has the benefit of not leaving behind a post that the administration would need to fill.

Graham Steele, a Stanford professor, left the Treasury Department in January. His position there, which oversaw banking regulation at Treasury, is often seen as a stepping stone role, as it's previously been held by Jerome Powell, who now leads the Federal Reserve; Michael Barr, who is the Fed's vice chair of supervision; and Sheila Bair, the former FDIC chair.

He would also have the strong backing of Brown, for whom he served as a banking committee staffer for many years.

Steele is often considered among the more progressive of Democratic banking policymakers. He would likely come under fire from Republicans, however, for his views on climate-related financial risks and the tools that federal banking regulators could wield to limit them.

The Senate previously approved his Treasury nomination in a 53-42 vote, largely along party lines.

Bharat Ramamurti

The former banking policy advisor to Sen. Elizabeth Warren, D-Mass., got a big promotion at the outset of the Biden administration, serving as the deputy director of the White House's National Economic Council and a key advisor to the White House on banking issues.

He left the administration in August.

Ramamurti would be among the most progressive choices for the post, and might have the influence necessary among Senate Democrats and the administration to get through the nomination process. His nomination, however, would likely be strongly opposed by Republicans.

He's vocal online and on the speaking circuit about anti-monopoly issues, and could be a natural fit for the agenda of policymakers like Consumer Financial Protection Bureau Director Rohit Chopra. Bank merger policy has been a priority of the administration, and has previously heavily influenced the leadership of the agency with the ouster of Trump-administration appointee Jelena McWilliams.