Top Democrat asks Biden to replace FDIC chairman

Sen. Sherrod Brown, D-Ohio, on Monday called on President Joe Biden to replace Federal Deposit Insurance Corporation Chairman Martin Gruenberg following allegations of widespread sexual harassment and misconduct within the agency.

There must be “fundamental changes at the FDIC,” Brown, chairman of the Senate Banking, Housing and Urban Affairs Committee, said in a statement. rack. “These changes start with new leadership that must fix the agency's toxic culture and put the women and men who work there – and their mission – first.”

“That's why I'm calling on the President to immediately appoint a new Chairman to lead the FDIC during this challenging time, and for the Senate to act on that appointment without delay,” Brown continued.

With his statement, Brown broke with fellow Democrats, who have largely condemned the allegations but refrained from calling for Gruenberg's resignation, instead calling on him to drive change at the agency. Brown's statement could mark the beginning of the end for the FDIC's top regulator, who was nominated for the job by Biden in 2022.

Law firm Cleary Gottlieb was released in April a damning report detailing an alleged culture of “sexual harassment, discrimination, and other interpersonal misconduct” at the FDIC.

The 174-page report, which was based on the stories of more than 500 people, also included allegations in part of Gruenberg's hot temper, accusing him of bullying and verbal abuse. Employees described the chairman as “aggressive” and “tough,” the report said. In one instance, Gruenberg allegedly shouted profanities at employees after delivering bad news, the report said.

“For far too many employees and for far too long, the FDIC has failed to provide a workplace that is safe from sexual harassment, discrimination, and other interpersonal misconduct,” the report said.

Investigators said that while Gruenberg's alleged conduct is not the “root cause” of misconduct at the FDIC, “we recognize that, as a number of FDIC employees put it in their discussion about Chairman Gruenberg, culture 'starts at the top.'”

The researchers added in the report that “Gruenberg's reputation raises questions about the credibility of the leadership's response to the crisis and the 'moral authority' to lead a cultural transformation.”

When reached by CNBC, the FDIC declined to comment on Brown's call for Biden to replace Gruenberg.

Brown has not called for Gruenberg to resign.

Gruenberg testified on May 15 before the House Financial Services Committee, where he apologized for misconduct at the agency and pledged to implement the report's recommendations.

The Republicans were quick to act calls for Gruenberg's removal after the report's release, while Democrats have so far been more restrained in their criticism of the chairman, who is also a Democrat.

If Gruenberg were to leave the agency before a replacement is confirmed, he would be leaving the company The FDIC Board of Directors politically deadlocked with two Democrats and two Republicans, putting the Biden administration's financial reform agenda in jeopardy.

According to the The Statutes of the FDICVice Chairman Travis Hill, a Republican, would assume the chairman's responsibilities if the position became vacant.