The House Financial Services Committee is holding a hearing today to conduct oversight of the Federal Deposit Insurance Corporation’s (FDIC) leadership and workplace culture. Lawmakers will hear testimony from FDIC Special Review Committee Co-Chairs Michael Hsu and Jonathan McKernan, as well as independent investigators from Cleary Gottlieb. The focus is on examining the failures of FDIC Chair Martin Gruenberg and misconduct within the agency.
Chairman Patrick McHenry opened the session with remarks emphasizing the need for urgent reforms at the FDIC. "At our May hearing to conduct oversight of the prudential regulators, members on both sides of the aisle expressed interest in holding a separate hearing on misconduct at the FDIC and the Cleary Gottlieb report," McHenry stated.
He continued, "Today’s hearing is focused exclusively on the FDIC’s toxic workplace culture and Chair Gruenberg’s abusive behavior." He thanked witnesses for their commitment to transparency.
McHenry criticized Gruenberg's announcement of his intent to resign at an undetermined future date, calling it a farce. "Resigning after the confirmation of a new chair is just more of the status quo," he said, adding that Gruenberg has instructed employees to continue as if he will remain until year's end.
Highlighting what he sees as Gruenberg's failure to accept responsibility, McHenry noted that three weeks after a White House pledge to replace him quickly, no successor has been nominated. "Deep institutional changes at the FDIC are needed now, not later," McHenry argued, urging President Biden to fire Gruenberg for cause.
"The Inspector General, Wall Street Journal, and Cleary Gottlieb all outlined abhorrent misconduct at every level of the agency in painstaking detail," McHenry remarked. He questioned how Gruenberg could have missed such behavior while leading the agency for most of the past 13 years.
McHenry also linked recent financial system events directly to Gruenberg's leadership. These include three major bank failures last March and revelations about toxic culture within the FDIC in November. He asserted that these issues impacted the FDIC's response to banking turmoil last year.
Concluding his remarks, McHenry called on Democrats to join Republicans in demanding immediate leadership change at the FDIC: "With the wellbeing of the agency, its employees, and our financial system on the line—it’s time for Democrats to join Republicans in calling for an immediate change in leadership at the FDIC."