WASHINGTON — President Joe Biden plans to nominate Wall Street regulator Christy Goldsmith Romero to chair the Federal Deposit Insurance Corporation (FDIC), the White House announced Thursday. This decision aims to bring new leadership to an agency plagued by widespread sexual harassment and longstanding employee mistreatment.
Goldsmith Romero’s Background and Experience
Goldsmith Romero has been a commissioner at the Commodity Futures Trading Commission (CFTC) for the past two years. Her career also includes serving as the top government watchdog for the 2008 bank bailout and holding senior roles at the Securities and Exchange Commission (SEC). If confirmed by the Senate, she will replace Martin Gruenberg, the current FDIC chair, who announced his intention to resign following a damning external report that criticized the agency’s workplace culture and questioned his leadership.
Gruenberg’s Controversial Tenure
Gruenberg, a longtime FDIC leader, stated he would step down only after a successor is confirmed. This decision prevents a potential vacancy that could elevate Republican vice chair Travis Hill, potentially threatening the Biden administration’s financial regulatory agenda. This agenda includes stricter oversight of large Wall Street banks, a point of contention in the political landscape.
Senate Confirmation Challenges
Sen. Sherrod Brown, chair of the Senate Banking Committee, has pledged to expedite Goldsmith Romero’s nomination. However, the Senate faces a tight schedule with the upcoming August recess. Goldsmith Romero, confirmed as a Democratic commissioner on the CFTC in 2022, may face a more contentious battle this time. The FDIC chair has significant influence over major regulatory proposals, such as the Basel III Endgame, which aims to increase capital requirements for large banks.
Goldsmith Romero’s Regulatory Stance
At the CFTC, Goldsmith Romero has advocated for tougher oversight of Wall Street, often clashing with CFTC Chair Rostin Behnam. She has called for more admissions of guilt in enforcement settlements, reevaluated the CFTC’s approach to individual investors, and warned of the risks in crypto markets. Her stance aligns with Biden’s broader regulatory objectives, including greater financial sector accountability.
Her Role in Financial Oversight
Before her tenure at the CFTC, Goldsmith Romero was the special inspector general for the Troubled Asset Relief Program (TARP), overseeing the massive bailout during the 2008 financial crisis. Nominated by President Barack Obama in 2012, she continued in this role through the Trump administration and the early Biden administration. She also held various staff positions at the SEC, contributing to her extensive experience in financial regulation.
FDIC’s Cultural and Structural Challenges
If confirmed, Goldsmith Romero will face the daunting task of reforming the FDIC’s toxic workplace culture. An investigation by Cleary Gottlieb Steen & Hamilton revealed extensive sexual harassment, discrimination, and bullying at the agency. The report criticized Gruenberg’s leadership, noting incidents of inappropriate behavior and questioning his ability to drive necessary changes.
Political Implications and Future Prospects
Following calls for new leadership from key Democrats and amid ongoing inquiries by the agency’s inspector general into workplace misconduct, Biden’s nomination of Goldsmith Romero represents a significant step toward addressing these issues. Republicans continue to press for Gruenberg’s immediate resignation, adding to the political pressure surrounding the FDIC’s leadership transition.
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