'Sometimes You Just Gotta Change The People': Warren Davidson Calls For Removal Of FDIC Director

4 months ago

During a House Financial Services Committee hearing last week, Rep. Warren Davidson (R-OH) spoke about the need to remove FDIC Director Martin Gruenberg.

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Transcript

00:00Gentleman yields back. Gentleman from Ohio, Mr. Davidson, Chair of our Housing

00:04and Insurance Subcommittee, is recognized for five minutes. Thank you,

00:07Chairman. Thank you for our witnesses. Mr. McKernan, I thank you for the work to

00:12highlight some of these issues. In your opinion, can an effective top-to-bottom

00:19cultural change be made at FDIC while Martin Gruenberg is chairman? I don't

00:24think we can have real culture change until we have that fresh start. That's

00:28been my experience, whether it was in the military or in business, frankly here,

00:32you can update the HR manual, you can write new standard operating procedures,

00:37you can train them all you want. Sometimes you just got to change the

00:40people. And it seems clear that we need to do that. Why is the delay? Director

00:47Hsu, why the delay? Why should we tolerate Gruenberg sticking around

00:53through the rest of the afternoon? So, at the board, we're not delaying. We are,

00:57we've taken steps already to hire a third, independent third-party expert, an

01:02independent monitor, and to restructure the reporting lines for incidents. So

01:06those are all actions that are required to reduce the fear of retaliation, to

01:10ensure that we've got the right outside expertise so we can make the changes

01:13that are necessary. So you're outsourcing the leadership challenge to some third

01:17party, and then you're gonna put a director in to implement what the third

01:21party came up with? The purpose of engaging with the outside parties is to

01:25make sure that we got the best expertise from out—we have to do this

01:28differently. Why not just hire a good leader? We have to do this differently

01:32than the past. We want to make sure that we've got the right plan, that we're

01:35implementing those steps. It sounds to me like the plan is

01:39that we're gonna come up with a committee that's designed to delay

01:42action while Gruenberg rides out the rest of the Biden administration and

01:48continues his time there. Mr. McCarnett, how long has Director Gruenberg been at

01:54the FDIC? 20 years as I understand. 20 years. How long has he been leading it?

01:5910 of the last 13. 10 of the last 13 years he's been leading it. You think

02:03he's had anything to do with poisoning this culture? I think the chairman's

02:08ultimately accountable for the culture. Generally that's the the answer. The

02:12leader, everything that happens or fails to happen in an organization, is

02:15ultimately the top leader's responsibility. That doesn't mean he's

02:19the one that did everything, but ultimately that's the duty of

02:22leadership. And anyone can find an excuse. It seems like Gruenberg's full of them.

02:26Leaders find a way. Director Suh, do you think Gruenberg's gonna find a way?

02:30Again, I'm focused on what I can control. So if you give him a good outside

02:35third-party outsourced solution, you think he could follow it with any

02:39credibility? The purpose of having the outside expertise is to make sure that

02:43the agency is doing the best it can for the employees of the agency. What's the

02:46due date for that? Around January 21st, 2025? No, it's right now. We have to do

02:52these things right now. I know we do, but you're outsourcing it to some third

02:55party. Are they supposed to get back to you around January 21st? No, the hiring of

02:59the third party, both the expert and the monitor, is currently in process right

03:03now. And we are also going to restructure the broken internal process that has led

03:08to retaliation. Well, it might take till January 21st to get rid of Director

03:12Gruenberg, but I'm pretty sure it'll be done right around that time frame, if not

03:17before. So, Mr. McKernan, is there anything that we could do between now and January

03:2421st to facilitate Director Gruenberg's departure at the FDIC? I don't know that

03:31I can speak to that, but I think that it's important that Congress continue to

03:35exercise its oversight role to hold us accountable, including the board, for

03:39making real actionable steps to get culture change moving. Well, obviously the

03:43President of the United States could fire him. That'd be great. No leadership coming

03:46from there. But Congress has the power of the purse. I mean, we're only funded till

03:53September 30th. In theory, we could eliminate funding for Director Gruenberg's

03:57position beginning October 1st of this year. We have an opportunity coming up in

04:02the appropriations process. We have a Holman rule that would facilitate just

04:06such an action directed at Gruenberg. Does anyone believe that would be

04:11appropriate to provide congressional accountability for Director Gruenberg?

04:19Think we should keep him in place, or do you think we should continue to pay

04:23Director Gruenberg? We're the ones that provide the funding for his paycheck.

04:26Should we keep him on the United States payroll? I mean, I was really encouraged

04:31to hear Mr. Varga talk about not defending the indefensible, but if we

04:37fund his paycheck into the next fiscal year, well, we're defending the

04:42indefensible. We shouldn't provide a dime to Director Gruenberg. So I hope my

04:46colleagues will defund his payroll, and I hope it's a moot point because Joe

04:51Biden could fire him this afternoon, and that'd be the appropriate action. Anywhere

04:55else, anyone doing these kinds of things would be walked out with a cardboard box

04:59that afternoon. And I hope that becomes norm within the FDIC to not tolerate

05:05these kinds of things, whether it's of the employees or the subordinate leaders

05:09that make up the chain of command. We need to fix this culture, and Congress

05:13can do that by holding Gruenberg accountable with appropriations. I yield

05:17back.

'Sometimes You Just Gotta Change The People': Warren Davidson Calls For Removal Of FDIC Director

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