WASHINGTON — Martin Gruenberg, chairman of the beleaguered bank agency that's come under fire for its toxic workplace, gave more details on how the agency will undergo reforms,
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The White House did not return requests for comments sent by American Banker over the two days of Congressional testimony.
The Cleary Gottlieb report called into question Gruenberg's ability to lead the FDIC through the necessary changes at the agency, and Republicans have called for him to step down. Gruenberg has held on to most Democratic support in the wake of the allegations in the report.
Sen. Elizabeth Warren, D-Mass., defended Gruenberg's continued leadership at the agency.
"The Republicans who have called today for your resignation are engaged in a purely political exercise," she said.
She said that Gruenberg's resignation would put Travis Hill, the current Republican vice chairman of the agency, in charge.
"Your resignation would do nothing to improve the toxic culture at the FDIC, but it would give Republicans a veto over bank policy," she said. "Culture starts at the top and it's your responsibility to fix this."
Gruenberg, in response to a line of questioning from Sen. Sherrod Brown, D-Ohio, the chairman of Senate Banking Committee, gave a more detailed breakdown of the reforms that the FDIC is pursuing in regards to coming changes at the agency.
"Most fundamentally, and I think this gets to the core of the issues raised, we have to cut the good old boys network that's serving as an impediment to employees coming forward and reporting experiences of abusive treatment," Gruenberg said. "We can do that by establishing a new independent office at the FDIC, outside of the existing organizational structure, accountable directly to the board that would assume all of the responsibilities of dealing with misconduct."
"We have existing offices with those responsibilities, those offices have failed. We need to move to a new office outside of the existing structure that will provide the kind of independence and assurance that our employees need to hold individuals accountable," he continued.
Four employees have been separated from the agency so far this year, Gruenberg said, and more are likely to come as the FDIC makes the changes outlined in the Cleary Gottlieb report.
Republicans continued to call for Gruenberg to step down.
"The offices haven't failed, you have," said Sen. Tim Scott, R-S.C., the top Republican on the panel. "It's that simple."
Scott entered into the record what he said is a statement from existing FDIC employees.
"We came together to write this statement because we are disappointed, frustrated, and heartbroken that the egregious issues documented in the Cleary report by over 500 employees have become a partisan issue," the anonymous employees said in the statement, provided to American Banker by Scott's office. "The issues identified are heinous, and our elected officials need to put politics aside and do what is right on behalf of their constituents."
The employees, in the statement, said that they do not have confidence that Gruenberg can make the necessary changes at the agency.
"The Chairman has communicated the action plan that he oversaw the creation of as proof of his commitment to improving conditions at the FDIC," according to the statement. "We, however, do not have confidence that this action plan is meaningful. Executives who have held their positions for long periods of time, who were in these positions when the events from the report took place, some who directly supervised individual perpetrators from the report, hold key roles as members of this action plan."
Other Republicans continued to heavily criticize Gruenberg and the agency.
Sen. John Kennedy, R-La., said he would introduce a bill that would extend the statute of limitations at the FDIC to allow the people affected by the behavior described in the report to sue Gruenberg and the agency.
"You're not going to be able to clear up the FDIC because you're going to be too busy defending yourself in court," he said.
