Free Trial

Gruenberg FDIC Uncertainty Could Weaken Democrats On Banking Regulations

US

FDIC chair Martin Gruenberg is preparing to step down after a report alleged a culture of harassment within the agency. Should Gruenberg step aside, without a successor confirmed by the Senate, it would effectively hand FDIC control to the GOP and undermine prospects of tightening banking regulations, in particular “Basel 3 Endgame” proposals to increase bank capital requirements.

  • Axios notes: “Gruenberg said he's willing to move aside once a successor is confirmed, which could take time and allow President Biden to keep him in the position indefinitely [but] acting chair as the role would automatically go to Travis Hill, the vice chairman of the board and a Republican.”
  • Semafor notes if Gruenberg stays on until Congress confirms his successor, "That should allow Democrats to keep control of the FDIC’s board, which would otherwise deadlock 2-2 between the parties if Gruenberg resigned immediately...”
  • However, considering election year dynamics, it's unlikely that Democrats can find sufficient support for a nominee in the Senate, especially considering many Republicans now consider former President Donald Trump favourite to win the presidency.
  • It is also unclear how long Democrats can lean on Gruenberg to stay in his post if a Senate vote fails to materialise. Senator Thom Tilis (R-NC) said Gruenberg “needs to get out of an environment he made toxic,” an argument which is likely to intensify as the election draws closer.
  • Notably, Senate Banking Committee Chair Sherrod Brown (D-OH), up for a tricky re-election bid in November, broke with Democrats and called on Gruenberg to step down.
251 words

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.

FDIC chair Martin Gruenberg is preparing to step down after a report alleged a culture of harassment within the agency. Should Gruenberg step aside, without a successor confirmed by the Senate, it would effectively hand FDIC control to the GOP and undermine prospects of tightening banking regulations, in particular “Basel 3 Endgame” proposals to increase bank capital requirements.

  • Axios notes: “Gruenberg said he's willing to move aside once a successor is confirmed, which could take time and allow President Biden to keep him in the position indefinitely [but] acting chair as the role would automatically go to Travis Hill, the vice chairman of the board and a Republican.”
  • Semafor notes if Gruenberg stays on until Congress confirms his successor, "That should allow Democrats to keep control of the FDIC’s board, which would otherwise deadlock 2-2 between the parties if Gruenberg resigned immediately...”
  • However, considering election year dynamics, it's unlikely that Democrats can find sufficient support for a nominee in the Senate, especially considering many Republicans now consider former President Donald Trump favourite to win the presidency.
  • It is also unclear how long Democrats can lean on Gruenberg to stay in his post if a Senate vote fails to materialise. Senator Thom Tilis (R-NC) said Gruenberg “needs to get out of an environment he made toxic,” an argument which is likely to intensify as the election draws closer.
  • Notably, Senate Banking Committee Chair Sherrod Brown (D-OH), up for a tricky re-election bid in November, broke with Democrats and called on Gruenberg to step down.