Democrats Batter Bank Regulator Over F.D.I.C.’s ‘Toxic’ Workplace Culture

The agency’s chair, Martin Gruenberg, has resisted Republicans’ calls to resign, but criticism by his own party raises questions about how long he can hang on.

Martin Gruenberg, wearing a suit, sits in a hearing room.
Martin Gruenberg, chair of the Federal Deposit Insurance Corporation, last year. Democrats expressed dismay over his responses to the crisis at his agency, after a scathing report of a culture of widespread sexual harassment and discrimination. Credit…Haiyun Jiang/The New York Times

Emily Flitter

Martin Gruenberg is still the leader of the Federal Deposit Insurance Corporation, an agency that supervises U.S. banks, but after a bipartisan grilling on Wednesday by members of a House committee overseeing bank regulators, he appeared to be hanging on by a thread.

Democrats expressed dismay over his responses to the crisis at his agency, after a scathing report of a culture of widespread sexual harassment and discrimination. One congresswoman appeared to call for him to resign, as Republicans have been doing for months.

“Personally, I do not have confidence that you can continue to lead in this role,” Representative Ayanna S. Pressley, Democrat of Massachusetts, told Mr. Gruenberg during an exchange. “I am so tired of white men failing up.”

In a bruising session that lasted more than three hours, committee members repeatedly asked Mr. Gruenberg what he planned to do to change his behavior in response to reports that he had berated employees and created an environment in which people were afraid to communicate with him. (Two other federal bank regulators, the acting comptroller of the currency, Michael Hsu, and the Federal Reserve vice chair, Michael Barr, also offered testimony on bank regulatory matters, but much of the committee’s focus was on the F.D.I.C.)

“It’s incumbent on me to be more sensitive to how my behavior is received by employees and to understand that the only thing that matters is not my perception but their perception,” Mr. Gruenberg said. At one point, in response to a suggestion by Representative Sylvia R. Garcia, Democrat of Texas, Mr. Gruenberg said he would take anger management classes.

Mr. Gruenberg is trying to save his tenure at the agency, which he has run for 10 of the last 13 years, partly to help see through a rule that the F.D.I.C. is proposing, along with other federal bank regulators, to tighten and expand oversight of the nation’s largest lenders. Big banks have fiercely opposed it, and if Mr. Gruenberg steps down, the rule is unlikely to have the necessary votes from F.D.I.C. board members to become final.

Mr. Gruenberg went into Wednesday’s hearing before the House Financial Services Committee with the backing of the White House and key Democratic lawmakers including Senator Sherrod Brown of Ohio, Senator Elizabeth Warren of Massachusetts and Representative Maxine Waters of California.

At the beginning of the hearing, Ms. Waters reiterated her support for Mr. Gruenberg. She said that if Republicans really cared about matters of harassment and abuse raised at the F.D.I.C., they would call for former President Donald J. Trump, who is on trial facing criminal charges that he paid hush money to a porn star, to step down as the presumptive Republican nominee for the 2024 presidential race.

It is not clear whether Mr. Gruenberg has managed to hang on to his broader backing. He will face Ms. Warren and Mr. Brown on Thursday, when he and the other federal bank regulators appear before the Senate Banking Committee.

A White House spokesman did not immediately respond to a request for comment.

Republicans have been calling for Mr. Gruenberg to resign since late last year when reports from The Wall Street Journal detailed a widespread pattern of harassment and abuse of employees at the agency. An independent report by the law firm Cleary Gottlieb, commissioned by a special committee that the F.D.I.C.’s board formed after the Journal reports, added new details to the picture when it was made public on May 7.

The House committee’s Republican chairman, Representative Patrick T. McHenry of North Carolina, expressed dissatisfaction with Mr. Gruenberg’s responses.

“You have not outlined how you intend to clean up your actions,” Mr. McHenry said. He added that he welcomed calls from two Democrats during the hearing to hold a separate hearing on the F.D.I.C.’s problems.

The heat coming from Democratic lawmakers was more of a surprise. In addition to Ms. Pressley’s comments, the F.D.I.C.’s chair faced several expressions of no confidence.

Representative Stephen F. Lynch, Democrat of Massachusetts, warned Mr. Gruenberg that he was “on a short leash,” while Representative Nydia M. Velázquez, Democrat of New York, said, “To be frank, I am not satisfied by the answers, Chairman, that you have given.”

“There’s no trust right now,” Representative Rashida Tlaib of Michigan, a Democrat, said. She added, “I don’t know how you build trust among people that are now relying on you.”

As the hearing wound down, one committee member, Representative William R. Timmons IV, a Republican from South Carolina, tried to get Mr. Gruenberg to draw a red line on his own tenure. “At what point, if things have not substantially improved, will you reconsider the calls for you to resign your leadership?” he asked.

To that, Mr. Gruenberg repeated what he had said in earlier questioning. “What we intend to do, and as part of our action plan, is to monitor carefully the implementation of the recommendations and their impact,” he said.

Harry Byrne

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