(Bloomberg) -- Federal Deposit Insurance Corp. Chairman Martin Gruenberg will step down on Jan. 19, ending a career at an agency that struggled with last year’s banking turmoil and then a toxic workplace scandal.
“It has been the greatest honor of my career to serve at the FDIC,” Gruenberg said in a message Tuesday to agency employees. “I have especially valued the privilege of working with the dedicated public servants who carry out the critically important mission of this agency.”
Gruenberg, a Democrat appointed by President Joe Biden, was a strong proponent of regulators’ bank-capital proposal. But he faced mounting pressure to resign after a scathing report that detailed allegations of harassment and discrimination at the regulator during his tenure and earlier. His departure will allow President-elect Donald Trump to appoint Gruenberg’s replacement and Republicans to gain control of the agency at a time when it is weighing critical regulations that banks have fought.
Gruenberg, 71, is serving in his second stint as chairman and has been an FDIC board member since 2005. In addition to twice serving as FDIC chair, he has led the agency in an acting capacity. Before joining the regulator, Gruenberg, who was trained as a lawyer, worked for almost two decades as a Senate staffer.
He already had agreed to resign after a months-long independent investigation by the law firm Cleary Gottlieb Steen & Hamilton found credible allegations of “sexual harassment, discrimination and other interpersonal misconduct” at the agency. That report didn’t conclude Gruenberg failed to act on the allegations first reported by the Wall Street Journal, but questioned whether he was the best person to lead workplace culture changes at the agency.
Gruenberg said earlier this year that he would leave his post once a successor was confirmed. Biden chose Christy Goldsmith Romero, a Democratic commissioner at the Commodity Futures Trading Commission, as his replacement. Her nomination has remained in limbo.
The upheaval at the agency further clouds a landmark bank-capital proposal meant to force the country’s largest lenders to hold significantly more capital to buffer against losses. The FDIC, in conjunction with the Federal Reserve and the Office of the Comptroller of the Currency, unveiled the original draft in July 2023, sparking furious opposition from the banking industry.
The capital overhaul is tied to Basel III, an international accord that followed the 2008 financial crisis and is intended to prevent future bank failures.
A revised version previewed in September would cut in half the proposed capital increase to 9% for the US global systemically important banks, including Citigroup Inc., JPMorgan Chase & Co. and Goldman Sachs Group Inc. But that plan drew criticism from two Republican FDIC board members as well as Democrat Rohit Chopra, Bloomberg has reported.
(Updates with additional context about Gruenberg’s departure.)
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