By Douglas Gillison and Chris Prentice
WASHINGTON (Reuters) – U.S. President Joe Biden will nominate Christy Goldsmith Romero, a Democratic member of the Commodity Futures Trading Commission (CFTC), to replace Martin Gruenberg as chairman of the Federal Deposit Insurance Corporation (FDIC), the White House said Thursday .
The White House’s intended nomination comes after Gruenberg, a Democrat, said in May that he would resign once a successor is confirmed by the Senate. The head of the FDIC bowed to pressure from lawmakers who said the banking regulator needed new leadership after an investigation found widespread sexual harassment and other misconduct at the agency.
Goldsmith Romero, 53, has a background in enforcement and has led major actions against Wall Street banks and other financial firms during her career. She joined the CFTC in March 2022 after a decade investigating financial crime and fraud as the watchdog of a major bailout program for the 2009 financial crisis.
The White House also said it plans to appoint Kristin Johnson, another Democratic CFTC commissioner, as the Treasury Department’s assistant secretary for financial institutions, a key role after three banks failed in 2023. Reuters reported on Wednesday that their appointments were imminent, as the Biden administration pushes for initial hearings for the nomination the week of July 8.
In progressive circles, Goldsmith Romero is seen as a good fit for the FDIC’s role and has the management experience and skills necessary to help fix the agency’s “toxic” environment, as the investigation described the FDIC, and to tackle other challenges.
Goldsmith Romero “would bring decades of financial services experience to the FDIC, including valuable experience as the special inspector general protecting taxpayers in the Troubled Asset Relief Program (SIGTARP),” said Democratic Senator Sherrod Brown, chairman of the Banking Committee who will vote on whether to promote the FDIC nominee.
“She has proven to be a strong, independent and fair regulator who is not afraid to do what is right.”
During Goldsmith Romero’s tenure as SIGTARP from 2012 to 2022, her office brought cases and participated in federal enforcement actions against major corporations, including Goldman Sachs, Morgan Stanley and General Motors.
Goldsmith Romero also received awards from the U.S. Attorney General and the Justice Department’s Criminal Division after her office uncovered a multibillion-dollar fraud that led to prison sentences for former executives at former mortgage lender Taylor, Bean & Whitaker and the bankrupt Colonial Bank.
“One more day with Martin Gruenberg at the helm of the FDIC is one too many,” said House Financial Services Committee Chairman Patrick McHenry, a Republican. “If confirmed, Christy Goldsmith Romero must take immediate steps to reverse the toxic culture overseen by Gruenberg and restore trust between FDIC employees and management.”
The FDIC is also grappling with the fallout from last year’s bank failures, which exposed oversight shortcomings at the regulator, and is trying to finalize a handful of controversial new rules for Wall Street banks, including major capital increases.
The appointment of Goldsmith Romero, a process that typically takes months, comes at a politically precarious time, just five months before the November general election.
A number of Senate Democrats are up for re-election in narrow circles, including Brown, making a potentially contentious confirmation process difficult to navigate. The Democrats closely control the Senate.
GUILTY ADMISSION
As CFTC commissioner, Goldsmith Romero has advocated for stronger oversight of U.S. markets and tougher penalties for misconduct.
In particular, she has urged the agency to obtain more admissions of misconduct from companies when resolving enforcement actions, especially from repeat offenders.
“We’ve seen Wall Street banks get one enforcement action after another … so I’m looking for a bigger deterrent effect,” she told Reuters in a 2022 interview.
Before being appointed to SIGTARP, Goldsmith Romero served as counsel to then-chairmen of the U.S. Securities and Exchange Commission, Mary Schapiro and Christopher Cox, and had investigated securities law violations.
She began her career as a law clerk at the US Bankruptcy Court in Nevada after graduating from Brigham Young University Law School in 1995.
The White House also said Biden plans to nominate Caroline Crenshaw for another term as a commissioner at the Securities and Exchange Commission and Gordon Ito as a member of the Financial Stability Oversight Council.
(Additional reporting by Pete Schroeder; Editing by Michelle Price and Rod Nickel)
