House Republicans open investigation into FDIC chairman

House Republicans open investigation into FDIC chairman

“The viability of your leadership is in question,” House Financial Services Committee Patrick McHenry (pictured) and two fellow Republicans wrote in a letter informing FDIC Chairman Martin Gruenberg of their plans to investigate his agency.

Sarah Silbiger/Bloomberg

Three top Republicans on the House Financial Services Committee said the panel will investigate Federal Deposit Insurance Corp. Chairman Martin Gruenberg following allegations of workplace misconduct at the agency. 

The accusations came up repeatedly throughout a pair of congressional hearings this week with Gruenberg and other financial regulators, and criticism of the agency and its chairman have grown throughout the week. 

The GOP lawmakers, led by committee Chairman Patrick McHenry, R-N.C., wrote in a letter to Gruenberg that the panel will use its “full arsenal” of investigative tools to examine Gruenberg and the agency. Reps. Bill Huizenga, R-Mich., the chairman of the subcommittee on oversight and investigations, and Rep. Andy Barr, R-Ky., chairman of the subcommittee on financial institutions and monetary policy, joined McHenry in the letter. 

“Chairman Gruenberg, the viability of your leadership is in question,” the three lawmakers wrote.

The panel has the ability to use compulsory measures, such as subpoenas, to compel the FDIC to cooperate with its investigation. 

“Our concern is underscored by your nearly 20-year tenure in all aspects of leadership and management at the FDIC, including serving twice as chairman,” the lawmakers wrote. “It has failed to instill the confidence the public needs to know their banking system is and will be safe and secure in the future.”

The lawmakers drew a possible direct connection between the workplace culture described in a Wall Street Journal investigation of a decadeslong toxic environment that led to the departure of female bank examiners, and a staffing shortage cited by the agency in its postmortem examination of the failure of Signature Bank. 

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“Your report’s limited discussion of staffing challenges related to bank examiners did not consider how the long-standing toxic FDIC culture inhibits employee retention,” the lawmakers wrote. “By ignoring or choosing to remain silent about workplace misconduct at the FDIC, your leadership may have contributed to the financial instability and threats to financial security of Americans that were observed in March.” 

While Republicans have been the harshest critics of Gruenberg and the agency following the allegations, Democrats have also voiced concerns about the report. 

“The FDIC’s employees play a critical role in ensuring our financial system operates in a safe and sound manner,” a group of 11 Senate Banking Committee Democrats led by Chairman Sen. Sherrod Brown, D-Ohio, wrote in a letter Friday to the FDIC’s acting inspector general. 

“It is imperative that the FDIC recruit and retain talented public servants and create a safe and professional work environment. Allowing employees that have engaged in misconduct to stay on the job, while losing talented employees because of the failure to meaningfully address these systemic issues, compromises public trust in the FDIC. The issues raised in these reports require immediate attention.”