The FDIC chairman faces calls to resign after reports of sexual harassment at the regulator

Martin Gruenberg, the chairman of the Federal Deposit Insurance Corporation, is facing a barrage of calls to resign after a shocking 234-page report released Tuesday exposed widespread sexual harassment and other misconduct by federal banking regulators.

The damning report, released by law firm Cleary Gottlieb Steen & Hamilton and resulting from a Wall Street Journal investigation in November, did not conclude that Gruenberg was solely responsible for the FDIC’s toxic workplace.

However, “we recognize that culture ‘starts at the top,’ as several FDIC employees expressed in their discussions of Chairman Gruenberg,” the report said.

Cleary Gottlieb also documented several instances in which Gruenberg — who has been FDIC chairman since 2023 but has held a senior position at the agency since joining the board in 2005 — lashed out at subordinates, “particularly when giving them bad news or sharing views.” “He disagrees.”

The incidents have created an atmosphere of fear at the company, with employees reluctant to tell Gruenberg potentially disturbing news, CNN previously reported.

Gruenberg’s temperament “could hinder his ability to build trust and effect meaningful culture change,” the report continued.

Calls for Gruenberg — a Democrat appointed by President Biden — to resign are being led by Republican lawmakers.

According to CNN, only Rep. Bill Foster (D-Illinois) on the left has called for Gruenberg to go.

If Gruenberg caves and actually resigns, it could have significant consequences for banks across the country, CNN reported.

According to Dennis Kelleher, president and CEO of Better Markets, a group that advocates, the move would kill the FDIC’s initiative to work with the Federal Reserve and the Office of the Comptroller of the Currency to adopt regulations of any kind that would limit capital requirements of banks for the supervision of the financial sector.

Kelleher also told CNN that without Gruenberg at the helm, rulemaking would come to a “complete standstill.”

A spokesman for the FDIC emphasized to the medium that Grünberg is “already implementing the report’s recommendations” and that the agency is working “at his direction” to “identify and appoint a transformation monitor and an independent external expert.” to support these efforts.”

The FDIC did not immediately respond to the Post’s request for comment.

Late last year, three agencies – the FDIC, the Fed and the Office of the Comptroller of the Currency – approved a preliminary step toward finalizing Basel III Endgame, a set of rules that would require America’s largest banks to set aside more capital, thereby limiting Amount of funds they have to lend to their customers.

The groups are in the process of evaluating the original proposal after Republicans on the FDIC board voted against Basel III Endgame and are ready to propose new rules based on comments received, according to CNN.

Jaret Seiberg, a political analyst at TD Cowen, said in a Tuesday note obtained by CNN that this is why “Gruenberg’s departure would be positive for the larger banks.”

However, Seiberg noted that he does not believe Gruenberg will resign because key Democrats such as Sen. Elizabeth Warren are not calling for his resignation, and White House press secretary Karine Jean-Pierre did not say Biden has any doubts about resigning Ability to lead the FDIC.

This is likely because if Gruenberg resigns, Vice Chairman Travis Hill, a Republican appointee, would automatically become chairman until a successor is appointed by the president and confirmed by the Senate, CNN reported.

Hill voted against Basel III Endgame.