White House says FDIC chairman to step down following report on agency's 'toxic culture'

NEW YORK — The White House said Monday that the chairman of the Federal Deposit Insurance Corporation will step down, a departure that follows the release earlier this month of a damning report about the agency’s toxic workplace culture.

The White House said Martin Gruenberg will step down once a successor is appointed and that President Joe Biden will name a replacement “soon.” The announcement came after the top Democrat on the Senate Banking Committee earlier Monday called for Gruenberg’s removal.

Biden expects the FDIC “to reflect the values of decency and integrity and to protect the rights and dignity of all employees,” Deputy Press Secretary Sam Michel said in a statement.

The FDIC is one of several U.S. banking system regulators. The Great Depression-era agency is best known for running the nation’s deposit insurance program, which insures Americans’ deposits up to $250,000 in case their bank fails.

Before Monday, no Democrats had called for Gruenberg’s ouster, although several came very close to doing so. But Sen. Sherrod Brown, the top Democrat on the Senate Banking Committee and who is facing a tough reelection campaign, issued a statement Monday calling for Gruenberg to step down, saying his leadership at the FDIC could no longer be trusted.

Gruenberg was grilled for two days last week on Capitol Hill in hearings largely focused on the FDIC’s workplace culture and the failures disclosed in the report prepared by an outside law firm.

“After chairing last week’s hearing, reviewing the independent report, and receiving further outreach from FDIC employees to the Banking and Housing Committee, I am left with one conclusion: there must be fundamental changes at the FDIC,” Brown said in a statement.

Republicans have been calling for Gruenberg’s ouster for some time and criticized the White House for not calling for his immediate departure.

Gruenberg has held positions in various levels of leadership at the FDIC for nearly 20 years, and this was his second full term as FDIC chair. His long tenure at the agency made him largely responsible for the agency’s toxic work environment, according to the independent report outlining the problems at the agency.

The report released Tuesday by law firm Cleary Gottlieb Steen & Hamilton cites incidents of stalking, harassment, homophobia and other violations of employment regulations, based on more than 500 complaints from employees.

Complaints included a woman who said she was stalked by a coworker and continually harassed even after complaining about his behavior; a field office supervisor referring to gay men as “little girls;” and a female field examiner who described receiving a picture of an FDIC senior examiner’s private parts.