WASHINGTON — Lawmakers — mostly Republicans — let loose almost immediately after the release of an
Those calls, while neither
"President Biden is on record telling White House staff 'I will fire you on the spot' for failing to treat colleagues with respect," said Sen. Tommy Tuberville, R-Ala., "I hope President Biden will be true to his word. Chairman Gruenberg has fallen short of this standard and should be removed from office by the president if he refuses to resign."
The workplace behavior issues at the FDIC present not just an
It's also a tricky needle for congressional Democrats to thread.
So far, only one Democrat — Rep. Bill Foster, Ill. — has openly called for Gruenberg's departure. Leading progressive voices in the Senate have notably left out demands for Gruenberg to resign from their comments following the report.
"Everyone deserves a workplace that's free of discrimination and harassment," said Sen. Elizabeth Warren, D-Mass. "I supported this independent investigation into misconduct during both Republican and Democratic Administrations at the FDIC. Chair Gruenberg has accepted responsibility, and I support his work to implement the action plan to improve the FDIC's culture."
Sen. Jack Reed, D-R.I., also pointed out that the allegations outlined in the review stretch back years, and don't just fall under Gruenberg's tenure as chairman.
"These findings detail a toxic workplace culture at the FDIC, particularly in the field and regional offices, stretching back decades," he said. The pattern of unacceptable conduct documented in the report is appalling. The FDIC must be fixed promptly and structurally so it better protects the employees who protect the safety of our banking system."
That point is a common refrain among Gruenberg's defenders following the release of the review. Should he be forced out of the agency, it could be difficult for many of the policies the Biden administration has pursued to advance, which would be beneficial to many of the people calling for Gruenberg to resign, said Dennis Kelleher, CEO of consumer advocate Better Markets, in a statement.
Kelleher said that the review, done by the law firm Cleary Gottlieb Steen & Hamilton LLP, didn't adequately address the misconduct that occurred under Republican leaders at the agency, and any behavior they may have exhibited that exacerbated those issues.
"There is no question that there has been very serious workplace misconduct at the FDIC for a long time and an inexplicable and inexcusable failure of leadership to stop it," he said. "Those failures have spanned Republican and Democratic leadership at the FDIC, but the reporting and investigation have been materially incomplete and misleading."
In response to a request from American Banker, the FDIC said that Gruenberg "is already implementing the recommendations in the report in addition to the action plan.
"At his direction, we are now working to identify and appoint a transformation monitor as well as an independent third-party expert to support these efforts," the spokesperson said.
If Gruenberg is pushed out of the FDIC, Travis Hill, the vice chairman of the agency, would become chairman.
That scenario would present a 2-2 split between Republicans and Democrats on the FDIC's board, effectively pausing the Biden administration's regulatory agenda for the agency — and, by extension, all joint banking rules of which the FDIC has a part. Those include tougher
That said, others cast doubt on the importance of a potential Gruenberg departure. Michele Alt, partner at the Klaros Group, said that fears about the regulatory agenda without Gruenberg are overblown.
"The preference of course [for Democratic lawmakers] would be to have a Democrat atop the FDIC," she said. "But it may be the case that people are overestimating the importance of having a Democrat as chair."
Alt said that many of the most important rulemakings from banks, like the Basel III endgame proposal, are already delayed and could even have to be reproposed, so a potential Gruenberg resignation might not impact the outcome of the rule regardless.
Whether or not this becomes reality depends largely on the next couple weeks, multiple bank policy experts said.
"If progressives hold their fire this week, then Gruenberg probably survives through the end of the year," said Jaret Seiberg, an analyst with TD Cowen, in a note.
The timing is fortuitous for Capitol Hill-watchers. Gruenberg was already scheduled to testify in front of the House Financial Services Committee and the Senate Banking Committee next week on Wednesday and Thursday, alongside Federal Reserve Vice Chairman for Supervision Michael Barr and acting Comptroller of the Currency Michael Hsu.
"Next week's hearing could be important, because it might give an indication of whether the Democrats are going to stand behind him," said Ian Katz, managing director at Capital Alpha Partners.
Those hearings could be critical to Gruenberg's survival at the agency. So far, both the White House and his Democratic allies on Capitol Hill haven't asked for his resignation, but that could change in the time between the release of the review and his testimony. Lawmakers are receiving closed-door briefings today on the results of the review, according to multiple committee sources familiar with the matter, which could affect lawmakers' views.
"I think it's going to depend on the hearings," said Karen Petrou, managing partner at Federal Financial Analytics. "I really do."
While Republicans are unified in opposing Gruenberg's continued time as chairman of the agency, Democrats have been more shaky, she said. They are in a tough position, Petrou said, because of Gruenberg's importance to the Democratic banking policy agenda, "but on the other hand, if these were allegations about a Republican or a business person, they would be up in arms."
"It's going to be touch-and-go," she said. "If the hearings go well and he holds his ground and nothing new or untoward comes out, he can hold out. If not, not."
