Maxine Waters, Elizabeth Warren Back FDIC Chairman With Agency Under Fire For Toxic Workplace

The head of the Federal Deposit Insurance Corporation (FDIC) is set to address Congress next week amid allegations of sexism, abuse, and racism within the workplace.

What Happened: Martin Gruenberg, who has been at the helm of the FDIC since January 2023, first joined the FDIC board in 2005 and also served as its chairman from November 2012 to mid-2018.

A third-party investigation has accused the FDIC of fostering a workplace that included sexual harassment and misconduct.

Gruenberg will face hearings from the House of Representatives Financial Services Committee on Wednesday, May 15 and the Senate Banking Committee on Thursday, May 16.

The FDIC chair faces bipartisan pressure to resign from the top position, but has also found support from some key figures in Congress.

"The Cleary report places the focus for ‘tone at the top' solely on the Democratic chair under whose leadership the agency received the most favorable ratings from its employees, while it completely ignores the activities of the two previous Republican chairs," Rep. Maxine Waters (D-Calif.) said Thursday, as shared by The Hill.

Waters said the report was "troubling" and that changes are needed in FDIC policies and programs. The congresswoman serves on the House Financial Services Committee.

Press Secretary Karine Jean-Pierre was asked about the report earlier in the week. Jean-Pierre didn't answer a question on if Biden still had confidence in Gruenberg leading the FDIC but told reporters that the FDIC chairman had "apologized and has committed to the recommendations" in the Cleary report, as shared by The Wall Street Journal.

Senator Elizabeth Warren (D-Mass.) showed support for Gruenberg earlier in the week, saying that the FDIC chairman apologized already. Warren said she backed "his work to implement the action plan to improve the FDIC's culture."

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Why It's Important: Gruenberg has been a member of the FDIC for over 20 years, and been the chairman or acting chairman on multiple occasions.

The report points to problems at the FDIC for years, which may have been a period of time when he was not the chairman.

Experts say Gruenberg might have to walk a fine line of admitting to problems and apologizing, while also pointing to how the FDIC will move past the issues when addressing Congress.

Released on Tuesday, the Cleary report said the FDIC needs "cultural and structural changes." The investigation was prompted by stories published by The Wall Street Journal pointing to misconduct at the agency.

According to Politico, the Cleary report also points to Gruenberg "losing his temper and interacting with staff in a demeaning and inappropriate manner." The report questions if Gruenberg is the right person to lead the agency through policy changes.

The report also found that responses to allegations of misconduct were "insufficient and ineffective."

"While we do not find Chairman Gruenberg's conduct to be a root cause of the sexual harassment and discrimination in the agency or the long-standing workplace culture issues identified in our review, we do recognize that, as a number of FIDC employees put it in talking about Chairman Gruenberg, culture ‘starts at the top,'" the report said.

Gruenberg has apologized and said he plans to stay in his current role.

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