US bank regulator Gruenberg to retire in January, clearing way for Trump picks

3:26 pm Tuesday, November 19th, 2024

By Pete Schroeder

WASHINGTON (Reuters) -Federal Deposit Insurance Corporation Chairman Martin Gruenberg will retire effective Jan. 19, he told colleagues on Tuesday, clearing the way for Republican President-elect Donald Trump to name new leadership to one of the top U.S. bank regulators.

The pending departure of Gruenberg, a Democrat and Wall Street critic who had been a senior leader at the FDIC for nearly two decades, comes at a critical time for the agency – more than 18 months since three big banks failed and ahead of what is expected to be a major shake-up of bank regulation under Trump.

In a message sent to employees at the FDIC, Gruenberg said he had informed President Joe Biden of his decision, which analysts said is likely to speed up Trump’s promised plan to slash burdensome regulations. 

“It has been the greatest honor of my career to serve at the FDIC,” he wrote. 

The FDIC shares responsibility for overseeing U.S. banks and is involved in several contentious rule-writing projects alongside other top regulators. Gruenberg’s exit throws into further doubt the future of those projects, including new long-term debt requirements for regional banks and the reworked “Basel III Endgame” capital rules.

Gruenberg had clung to his job since November 2023 when a Wall Street Journal report exposed widespread misconduct at the FDIC. The report was confirmed by a damning external review that also called into question Gruenberg’s leadership.

Gruenberg has previously vowed to address longstanding cultural issues at the agency. He announced in May he would step down once his successor was confirmed, but the Senate has yet to advance Biden’s pick, Commodity Futures Trading Commission official Christy Goldsmith Romero. On Monday, the top Republican on the Senate Banking Committee, Tim Scott, said he would not vote on her nomination, and called on Biden to withdraw it. 

While Gruenberg’s term expires in 2028, lobbyists and analysts widely expected Trump would try to remove him, citing the independent report. Gruenberg’s decision to resign avoids a potentially messy fight and allows Trump to quickly install his own chair.  

“It’s the lowest-friction outcome,” said Ian Katz, managing director of Capital Alpha Partners. “Now the decks are cleared for the Trump administration to figure out who they want.”

Upon Gruenberg’s departure, the FDIC chair role will likely pass to Travis Hill, the agency’s vice chair and a Republican whom Trump transition officials are also considering for the top job permanently, Reuters reported this month. 

A spokesperson for Hill declined to comment.

Gruenberg has been at the FDIC since 2005 and is the longest-serving FDIC board member in the agency’s 89-year history. During that time he served as its chair twice – once under President Barack Obama and the second under Biden.

Gruenberg and other bank regulators are due to testify before Congress on Wednesday.

(Reporting by Pete Schroeder; additional reporting by Douglas Gillison; editing by Michelle Price and Leslie Adler)