'Chairman Gruenberg Should Resign': Bryan Steil Calls For The Termination Of The FDIC Chair

4 months ago

At a House Financial Services Committee hearing held last week, Rep. Bryan Steil (R-WI) spoke about the leadership at the FDIC.

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Transcript

00:00The gentleman from Wisconsin, Mr. Stile, who is also the chair of the House

00:05Administration Committee, is now recognized for five minutes. Thank you

00:08very much, Mr. Chairman. Mr. Hsu, after the Wall Street Journal published its

00:13reports in November, Chairman Gruenberg announced he had already hired Baker

00:18Hostetler to conduct a third-party review. Then a week later, the FDIC Board

00:23of Directors established a special review committee to oversee a

00:27third-party review. Why did the board believe it was necessary to create a

00:32special committee and hire an outside law firm to conduct the review? The board

00:37unanimously voted to create the special review committee to ensure that there's

00:40independence and credibility with regards to that review. And would there

00:44be a concern that there'd be a lack of credibility or independence if that

00:47review would have been selected by Mr. Gruenberg? I think that's implied

00:53within that resolution, yes. Okay, so let me jump to you, Mr. McKinnon, if I

00:58can. From my understanding, Baker Hostetler is already investigating the FDIC when

01:02Claire Gottlieb was chosen, as just discussed. Whose decision was it to scrap

01:06Baker Hostetler's investigation? The Special Review Committee made the

01:11decision to go with Cleary instead of Baker. So it was the Special Review Committee, not

01:14the full FDIC board? That's right, just Director Sue and I. And could you also

01:18comment again as to why, and see if you agree here with Mr. Hsu, as to why

01:21Cleary Gottlieb was chosen instead of Baker Hostetler? Well, the way I looked at

01:26it is we had to have an independent review, not a chairman-driven or

01:30staff-driven review. You can't investigate yourself. You have to have someone from

01:33the outside, the best we've got, they're independent directors. Also, when you

01:37looked at the terms of the Baker engagement, raised real questions around

01:41the independence. It was very narrow in scope. It was very limited in budget. I

01:44thought that was part of the reason we made a strong case for a separate

01:48committee of the board to lead the investigation. Thank you very much. Back

01:52to you, Mr. Hsu, if I can. There's a long history of incidents involving Chairman

01:56Gruenberg's temper at the FDIC predating, obviously, the Wall Street Journal

01:59reporting. Were you aware of the internal FDIC investigation in 2008 into

02:07Gruenberg's behavior before the Wall Street Journal articles appeared? No. Was

02:12there, there was, you were, you were not formally aware? You had no, no knowledge

02:17that any review had been conducted? No, no. I was not aware of either formally or

02:23informally. So there wasn't any casual conversation at the workplace or on the

02:27water cooler that this review might be ongoing? I was not aware. You're not aware.

02:32Mr. Director McKinnon, if I can come back to you, were you aware? Just make sure I

02:37understand the question. Was I aware of the 2008 investigation? Prior to the Wall

02:40Street Journal article. Yeah, I heard, I had heard rumors about it. And so you had

02:44heard rumors. Did you have, did you have full evidence? Walk me through what that

02:47looked like to you. So, scratching back, how did I know and what did I know then?

02:52It was just casual conversation amongst employees of the FDIC that this review

02:55by a supposed, we can have the discussion as to the independence of the

03:00law firm, but a law firm review of the behavior of the chairman? Was that just

03:04water cooler talk around the FDIC? There's a lot of open secrets, as you know, in DC and this

03:08was one of those that there had been an issue in 2008 and also an

03:11investigation. And you would say was it widely known at the FDIC? At the FDIC,

03:16that I can't speak to, I don't know. Was it, where was it widely known? Where would

03:20you have thought that this would have been a casual conversation two

03:23individuals might have had? I was in the, I was a Senate staffer at the time and I

03:27think folks knew then. So, Senate staffers who were involved in the

03:31broader, probably Senate Banking Committee then, would have had general

03:34knowledge that this was ongoing? There was a, I was speaking to the fact of the

03:38investigation. That an investigation was was ongoing? Oh, no, no. I'm sorry that

03:43there had been an investigation. That there had been an investigation, but not

03:45that the Baker Hosteller was conducting a review? Oh, I'm sorry. No, the Baker

03:49then came out of the Wall Street Journal reporting. So, you did not, so great, so

03:54this is good that we're diving into it. So, you did not have knowledge that the

03:57Baker Hosteller review was ongoing until you read about it in the Wall Street

04:00Journal? Oh, that's right. Where did I learn? I don't remember where I learned

04:03about the Baker. I think it was actually at the hearings immediately after the

04:06Wall Street Journal. But after the Wall Street Journal reporting, it was not part

04:10of a casual conversation you had with people? Right. You had heard the casual

04:13conversation, there were problems at the FDIC. That was, I think, reasonably well

04:17known and it has now been fully exposed to the level that it was. But, you

04:21did, but the Baker Hosteller review, you were unaware of? It was not brought to the Board's attention, which is a

04:26problem, because this, the Board is supposed to act on major matters. Instead,

04:29the chairman retained a firm to do an investigation, which would have attracted

04:33a lot of publicity without alerting the Board. Thank you. In my limited time, I

04:37just think it's so important here that Chairman Grunberg should resign. He

04:40should have never been involved in the initial review with a third party for

04:43the exact reasons that you identified for us here today. It is noted, and is

04:49noted by Mr. Rose re-quoting President Biden, he's saying he has no if, ands, or

04:53buts about whether or not someone engaged in this action should be

04:58terminated. He should be terminated. He engaged in the action, and to me, it's

05:03pretty clear as to what's going on. The administration is concerned about the

05:07policies, and they're willing to put their agenda ahead of protecting people.

05:12Mr. Chairman, I yield back.

'Chairman Gruenberg Should Resign': Bryan Steil Calls For The Termination Of The FDIC Chair

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