By Piet Schröder
WASHINGTON (Reuters) – Martin Gruenberg, chairman of the Federal Deposit Insurance Corporation, will retire effective Jan. 19, he told colleagues on Tuesday. In doing so, he cleared the way for newly elected Republican President Donald Trump to appoint new leadership for one of America’s top banking regulators.
The impending 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 major banks failed and ahead of what was expected. under Trump would mean a major change in banking regulation.
In a message to FDIC employees, Gruenberg said he had informed President Joe Biden of his decision, which analysts say will likely accelerate Trump’s promised plan to cut burdensome regulations.
“It has been the greatest honor of my career to serve with the FDIC,” he wrote.
The FDIC shares responsibility for supervising U.S. banks and has been involved in several controversial regulatory projects along with other top regulators. Gruenberg’s departure casts further doubt on the future of these projects, including new long-term debt requirements for regional banks and the revised ‘Basel III Endgame’ capital rules.
Gruenberg has held on to his job since November 2023, when a Wall Street Journal report exposed widespread misconduct at the FDIC. The report was corroborated by a scathing external review that also questioned Gruenberg’s leadership.
Gruenberg has previously pledged to address long-standing cultural issues at the agency. He announced in May that he would step down once his successor was confirmed, but the Senate has not yet introduced 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.
Although Gruenberg’s term ends in 2028, lobbyists and analysts widely expected Trump would try to oust him, citing the independent report. Gruenberg’s decision to resign avoids a potentially messy battle and allows Trump to quickly install his own seat.
“It’s the lowest-friction outcome,” said Ian Katz, managing director of Capital Alpha Partners. “Now the cards are open so the Trump administration can pick who they want.”
Upon Gruenberg’s departure, the role of FDIC chairman will likely pass to Travis Hill, the agency’s vice chairman and a Republican who is also under permanent consideration by Trump transition officials for the top job, Reuters reported this month.
A spokesperson for Hill declined to comment.
Gruenberg has been with 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 chairman twice: once under President Barack Obama and once under Biden.
Gruenberg and other bank regulators will testify before Congress on Wednesday.
