Regulatory

White House nominates new FDIC chair to replace embattled Gruenberg

Christy Goldsmith Romero, an experienced federal attorney and financial regulator, would replace Martin Gruenberg, who announced his resignation last month

The White House on Thursday nominated Christy Goldsmith Romero as chair of the Federal Deposit Insurance Corp. (FDIC), putting her on track to head the U.S. bank regulator following the scandal-induced resignation of Martin Gruenberg.

Goldsmith Romero, who must still be confirmed by members of the U.S. Senate, has been a commissioner at the Commodity Futures Trading Commission (CFTC) since March 2022. She has more than 20 years of experience as a federal attorney and financial regulation leader under four U.S. presidents.

Her career includes a 12-year stay at the Department of the Treasury, where much of her time was spent as the Special Inspector General for the Troubled Asset Relief Program (TARP). The highly controversial TARP was implemented in the wake of the subprime mortgage crisis and allowed the federal government to become a shareholder in more than 700 banks.

The Conference of State Bank Supervisors (CSBS) issued a statement in which Karen Lawson, its executive vice president for policy and supervision, criticized the nomination.

“By nominating an individual to the FDIC Board who lacks state bank supervisory experience, the White House, once again, has ignored the requirements of the Federal Deposit Insurance Act,“ Lawson said.

“Congress insisted on state supervisory experience on the FDIC Board for a reason: states are the chartering authority and primary regulator for 79% of all U.S. banks. State supervisors understand the economic impact that state-chartered banks have on the families and small businesses in their communities. Federal supervision and regulation of banks should be guided by the important state and local perspective.

“In considering this nominee, the Senate should fully explore her positions on critical matters affecting the dual-banking system and the importance of preserving the role of the states in our financial system.“

In November 2023, Gruenberg and the FDIC became embroiled in scandal after an investigation by The Wall Street Journal uncovered years of sexual harassment and misogyny that created a “toxic work environment.” The report noted that, in 2020, ”the agency’s inspector general found the FDIC’s policies for preventing, identifying and disciplining sexual harassment fell short.”

Last month, an independent investigation by Cleary Gottlieb Steen & Hamilton LLP, a New York-based law firm, “confirmed a workplace culture rife with pervasive sexual misconduct, discrimination and retaliation,“ according to reporting from Politico. Although the investigation did not call for Gruenberg’s resignation, it also questioned whether he had the “moral authority” to imposed needed reforms and detailed instances in which Gruenberg “lost his temper and berated staff.“

A few weeks later, Gruenberg announced his resignation upon the confirmation of his successor. He has been a member of the FDIC board of directors since 2005, serving two separate stints as chair as well as multiple stints as acting chair.

Reuters reported that Senate confirmation hearings for Goldsmith Romero could begin as early as next month, with the new chair potentially in place prior to the November presidential election.

U.S. Rep. Patrick McHenry (R-N.C.), the chairman of the House Financial Services Committee, issued a statement Thursday following the nomination of Goldsmith Romero.

“Another day with Martin Gruenberg at the helm of the FDIC is one too many,” McHenry said. “Chair Gruenberg’s successor must be prepared to hit the ground running to implement the Cleary Gottlieb recommendations and end the egregious misconduct that has come to define the agency during his tenure.

“If confirmed, Christy Goldsmith Romero must immediately begin taking steps to reverse the toxic culture overseen by Gruenberg to rebuild trust between FDIC employees and management. The Senate must move forward with confirmation proceedings expeditiously to curtail Chair Gruenberg’s ability to further damage the agency and endanger financial stability.”

Goldsmith Romero was also an adjunct professor of law at Georgetown University Law Center and the University of Virginia Law School from 2019 to 2021. She taught courses in securities regulation, cryptocurrency regulation and federal oversight.

She also spent six years at the Securities and Exchange Commission (SEC), including as counsel to chairs Mary Schapiro and Christopher Cox during the financial crisis of the late 2000s. She earned a law degree from Brigham Young University and an undergraduate degree from Old Dominion University.

Editor’s note: This article was updated to include comments from the Conference of State Bank Supervisors.

Leave a Reply

Your email address will not be published. Required fields are marked *

Most Popular Articles

3d rendering of a row of luxury townhouses along a street

Log In

Forgot Password?

Don't have an account? Please