Gruenberg FDIC Uncertainty Could Weaken Democrats On Banking Regulations

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.