President Joe Biden intends to nominate Federal Deposit Insurance Corp. (FDIC) Acting Chair Martin Gruenberg to a second term leading the agency, the White House said Monday.
Gruenberg has served on the regulator’s board of directors since 2005, and he was chairman from 2012 to 2018.
Incidentally, the announcement came on the first business day after Sen. Catherine Cortez Masto, D-NV, won re-election, ensuring Democrats a majority in the Senate. That means Biden can nominate potentially controversial figures to permanent posts without the need to secure Republican senators’ votes.
Gruenberg presumably won himself no Republican friends when he and Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra — each then a member of the FDIC’s board — published (on the CFPB website) a review of bank merger policies last December without the approval of the FDIC’s then-chair, Jelena McWilliams, a Republican.
McWilliams argued that only the chair controls the FDIC board’s agenda, whereas Gruenberg and Chopra said a majority of directors also possesses that right. Michael Hsu, acting head of the Office of the Comptroller of the Currency (OCC) also serves on the FDIC board, giving Democrats a majority on the five-slot body.
The FDIC rebuked Gruenberg and Chopra’s move as an invalid affront to a “proud 88-year history of Board members working together in a collegial manner.”
Sen. Pat Toomey, R-PA, the ranking member of the Senate Banking Committee, went so far as to call the effort a “failed, publicity-seeking attempted coup.”
Republicans on the House Financial Services Committee launched an investigation into what they called a “power grab” by Chopra, Gruenberg and Hsu.
McWilliams resigned Dec. 31, and Biden named Gruenberg the regulator’s acting chief in early February.
Biden then surprised some Democrats in September by naming two Republicans, Travis Hill and Joseph McKernan, to serve on the FDIC board.
Law requires partisan balance on the board of the agency and, without McWilliams, it had no Republicans. But if McKernan or Hill were to be confirmed ahead of Gruenberg and the Senate had flipped, lawmakers could name Hill, the vice chair nominee, as the FDIC’s acting chair, effectively replacing Gruenberg. Hill previously served as an aide to McWilliams.
In September, Biden said Hill and McKernan’s nominations would advance to the Senate alongside a nomination for permanent chief.
Gruenberg, meanwhile, was set to make two appearances on Capitol Hill this week — in separate hearings alongside Hsu and the Federal Reserve’s vice chair for supervision, Michael Barr, in front of the Senate Banking Committee on Tuesday and the House Financial Services Committee on Wednesday.
Senate Banking Committee Chairman Sherrod Brown, D-OH, lauded Gruenberg’s nomination Monday.
“Marty has years of experience shepherding the agency through difficult economic times, working with board members of both parties, and taking actions that protect consumers and strengthen the banking system,” he said. “With experienced leadership at the helm, the FDIC can continue to address risks to our financial system, increase access to affordable financial services to consumers, and ensure that banks honor their commitment to communities across the country through the Community Reinvestment Act.”
Other analysts asserted that the nomination of a past chair to lead the agency a second time may demonstrate a lack of willing or qualified candidates.
“It’s not that they don’t have a deep bench,” Isaac Boltansky, director of policy research at BTIG, told The Wall Street Journal. “They don’t seem to have anyone in the locker room at all.”
Upon becoming acting chair in February, Gruenberg rattled off a list of five priorities for 2022 at the FDIC: the Community Reinvestment Act; climate change; the Bank Merger Act; crypto assets; and the Basel III capital rule.
Gruenberg, in February remarks, pushed for a “careful interagency review of the bank merger process.” He also said the FDIC would seek public comment on guidance meant to manage climate risk and establish a working group to that end.
Further, Gruenberg advised regulators “to provide robust guidance … on the management” of risks associated with crypto assets.
“All of these priorities will require close collaboration among the federal banking agencies,” Gruenberg said at the time.