WASHINGTON — Lawmakers on both sides of the aisle described the acting
Gruenberg, joined by Republican nominees Travis Hill, the White House's pick for vice chair of the agency, and Jonathan McKernan, who is up for a board seat, enjoyed broad support from Democrats at Wednesday's nomination hearing. The three nominations, if confirmed, would give the agency a full board — a feat for the Biden administration, which has struggled to get its financial policy nominees through the Senate.
Republicans in the hearing criticized the acting chairman for his role in the
The panel's chairman, Sen. Sherrod Brown, D-Ohio, noted that Gruenberg has been confirmed unanimously by the Senate five times in his long FDIC career. This would be Gruenberg's second time being confirmed to lead the agency.
"A reasonable question to ask is why, after serving on the FDIC board for such a long period, I would seek nomination to serve as chairman again," Gruenberg said. "The answer is pretty straightforward. My parents, who were Holocaust survivors from Poland, gave me the gift of being born in this country. Public service is a calling that has always been most meaningful to me. The FDIC is a great agency of our government, whose mission of maintaining public confidence and stability in our financial system is critical to our country's well-being."
But that unanimous streak could be broken. While Gruenberg is being presented along with the two Republican nominees as a package, which means all three are likely to have the votes to pass, it's unlikely that he'll have another unanimous vote given today's more fiercely partisan Congress.
At the hearing, Sen. Pat Toomey, R-Pa., expressed concern about the departure of McWilliams. Gruenberg, along with Consumer Financial Protection Bureau Director Rohit Chopra, pushed a request for comment on bank merger policy last year that then-Chairman McWilliams opposed, sparking a series of events that eventually led to her departure.
Republicans have pushed the idea that Gruenberg and Chopra led a coup of the board, despite an
"I'm concerned that what you and some of your colleagues did really undermines the FDIC and could have lasting implications," Toomey said.
Other Republicans offered measured support of the slate of nominees. Sen. Richard Shelby, R-Ala., former chairman of the committee, said he wants Brown to expedite the nomination process to the Senate floor, despite concerns about the board.
"I have to associate myself with some of the concerns that Sen. Toomey made of what went on at FDIC that more than bothered a lot of us because it was unprecedented and so forth," Shelby said. "I know you're highly qualified by experience on this committee and as chairman of the FDIC, but these are real concerns, something that you and others ought to be thinking about deeply."
Toomey didn't ask questions that appeared aimed at taking Gruenberg's nomination. Instead, he tried to get Gruenberg to say that he would allow the Republican nominees the budget and flexibility to hire advisors, and that he would make sure they receive meeting materials well ahead of time.
Sen. Cynthia Lummis, R-Wyo.,
Gruenberg, in response to Lummis's question on the issue, said the prerogative to nominate board members lies with the White House and is "above my pay grade."
Another big topic in Washington — crypto — got a smattering of mentions. Gruenberg said that, especially after the unwinding of the crypto exchange FTX, it's clear that Biden's regulators took the right tack in trying to insulate the banking system.
"The evidence is clear now: We had companies that were engaging in highly speculative activity, highly leveraged and vulnerable to loss of confidence and a run," Gruenberg said. "They did not have direct exposure to the insured financial institutions, and as a result the failure of those firms was really limited to the crypto space and really ended up not impacting the insured banking system."
Hill and McKernan both emphasized that they would focus on making sure banks engage with crypto in a "safe and sound" manner.
"I think there's a big difference between a bank providing custody services for crypto-related activity versus a bank using its balance sheet to engage in speculative investments," Hill said. "But I think generally the responsibility of the FDIC and the other banking agencies is to ensure that, to the extent activities are legally permissible, that they're done in a safe and sound way."
The two Republican nominees also told Brown that they would consider a "holistic review" of enhanced capital requirements for banks.
On the Community Reinvestment Act revamp, which regulators proposed in May, Gruenberg said the goal currently is to complete the rulemaking in "the early part of next year."
Brown will likely send the nominations to the full Senate before the end of the year.
