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McHenry at Hearing to Conduct Oversight of the FDIC: “Deep Institutional Changes at the FDIC are Needed Now, Not Later”

Washington, Jun 12 -

Today, the House Financial Services Committee is holding a hearing to conduct oversight of the Federal Deposit Insurance Corporation’s (FDIC) failed leadership and toxic 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 Gottleib, as Republicans dig deeper into the failures of FDIC Chair Gruenberg and misconduct at the agency. 

Watch Chairman McHenry’s opening remarks here.

Read Chairman McHenry’s opening remarks as prepared for delivery:

“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.

“To my colleagues—I heard you. Today’s hearing is focused exclusively on the FDIC’s toxic workplace culture and Chair Gruenberg’s abusive behavior.

“To our witnesses, thank you for being here today. Your commitment to transparency has not gone unnoticed. 

“Just days after our last hearing, Chair Gruenberg announced his intent to resign at some undetermined future date.

“His resignation should’ve been welcome news to the FDIC employees who have been subjected to an appalling culture of misconduct and abuse. But it was all a farce.

“Resigning after the confirmation of a new chair is just more of the status quo. Chair Gruenberg knows this, which is why he has told employees to continue as if he will be there until the end of the year. That is outrageous.

“This is part and parcel of Mr. Gruenberg’s failure to accept responsibility for his actions. His approach to a long-overdue cultural overhaul of the FDIC seems to be deny, deflect, delay.

“Case in point, three weeks after the White House pledged to move quickly to replace him, we have yet to see a successor even nominated.

“Deep institutional changes at the FDIC are needed now, not later, which is why I called on President Biden to fire Chair Gruenberg for cause.

“There is a clear succession plan in place. The agency’s operations would continue unabated if he rightly stepped down today—so what’s the delay?

“The Inspector General, Wall Street Journal, and Cleary Gottlieb all outlined abhorrent misconduct at every level of the agency in painstaking detail.

“But based on Chair Gruenberg’s claims we’re supposed to believe he somehow missed this appalling behavior while leading the agency for 10 of the last 13 years. 

“It’s clear any cultural change will happen in spite of his presence—not because of it.

“The consequences of Chair Gruenberg’s failed leadership go further than the four walls of the FDIC.

“The events that have unfolded over the last 15 months in our financial system involving him directly—or the FDIC under his watch—include:

“Three major bank failures last March, including Signature Bank, which was directly under his supervision.

“In April, Chair Gruenberg’s Chief Risk Officer reviewed the FDIC’s actions leading up to Signature’s failure and concluded staffing—whether it be shortages or communication issues—was a major issue.

“In November, revelations came to light about the FDIC’s toxic culture and Chair Gruenberg’s own abusive behavior towards staff tasked with bringing him quote ‘bad news.’

“It is fair to conclude that Chair Gruenberg’s behavior directly impacted the FDIC’s response to last year’s banking turmoil. 

“He moved slowly, couldn’t make decisions—and undoubtedly—lashed out at his own employees. 

“So, I ask the White House and my Democratic colleagues—does your own agenda really outweigh the need for a competent leader at the helm of 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.” 

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