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May 20, 2024, 12:49pm EDT
politicsNorth America

Sherrod Brown’s turn against the FDIC chair comes with a caveat

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The News

Ohio Sen. Sherrod Brown called on the Biden administration to replace the head of the Federal Deposit Insurance Corporation after an independent investigation found widespread sexual harassment and bullying at the agency.

“T​here must be fundamental changes at the FDIC,” the Senate Banking Committee Chair said in a statement. “Those changes begin with new leadership, who must fix the agency’s toxic culture and put the women and men who work there – and their mission – first.”

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Brown becomes the first Democratic heavyweight to call for Martin Gruenberg to go. The move seemingly puts him at odds with the Senate’s other leading progressive voice on financial oversight, Sen. Elizabeth Warren, who has protected Gruenberg and ignored Republican criticisms that Democrats are overlooking the FDIC’s problems to save their regulatory agenda.

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If Gruenberg were to step down, it would leave the FDIC’s board of directors split 2-to-2 between Democrats and Republicans, at least until a replacement could be confirmed, deadlocking it at a time when progressives are crafting a series of tighter bank rules, including a contentious update of capital requirements.

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Jordan’s view

Importantly, however, Brown’s statement does not call on Gruenberg to shuffle off right away. Instead, it urges the administration “to immediately nominate a new Chair” and “for the Senate to act on that nomination without delay.” That would seemingly leave open the option for Gruenberg to stick around until his successor could be approved.

When I asked for clarification, a Brown spokesman declined to comment on whether the Senator believed Gruenberg should resign immediately or wait for his replacement to be confirmed.

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One way to read Brown’s move, then, might be that he’s throwing the ball back to Republicans, who’ve said Gruenberg should go, and asking them to prove their concern over the agency’s culture is genuine and not part of a tactical move to kneecap its board. In his statement, he says he expects Senators “will put politics aside and join this effort to bring new leadership to the agency to ensure a safe workplace for the women and men who protect our financial system.”

Whether this puts much additional pressure on President Biden is unclear. Brown may be an influential voice, but it’s not obvious who the administration could pick to replace him in short order — or if it would want to divert serious attention to a confirmation fight in order to address a political issue that isn’t exactly leading cable news at the moment.

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Notable

  • The independent investigation of the FDIC’s workplace culture by law firm Cleary Gottlieb found that Gruenberg’s ferocious temper contributed to its toxic environment. “A number of executives also noted that, although it ultimately did not prevent them from reporting on issues as necessary, staffers fretted about and delayed delivering news that they feared would upset Chairman Gruenberg, and that his reactions did have a ‘chilling’ impact on open communications,” it concluded.
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