By Douglas Gillison, Andrea Shalal and Chris Prentice
(Reuters) -The White House could decide on a nominee to replace the chairman of the U.S. Federal Deposit Insurance Corporation (FDIC) as early as next week, two people with knowledge of the matter said on Friday as further evidence of the government’s failure agencies emerged.
FDIC Chairman Martin Gruenberg said this week he would resign once a successor is confirmed by the Senate, following pressure from lawmakers who said the agency needed new leadership after an independent investigation found widespread sexual harassment and other misconduct at the agency .
On Friday, the FDIC’s internal watchdog also said it was not immediately notified of allegations of misconduct involving senior FDIC officials, a development that could fuel Republican calls for Democratic President Joe Biden to fire Gruenberg.
The White House is under pressure to quickly fill the role and maintain Biden’s financial regulation agenda, including major capital increases for banks, just six months before the US presidential election.
The FDIC insures bank deposits and helps ensure the stability of the banking system.
A decision on a candidate is expected within weeks and could come as early as next week, a senior administration official said Friday. The White House has already been in contact with Sen. Sherrod Brown, chairman of the Senate Banking Committee that oversees the FDIC, about scheduling a quick confirmation hearing, another White House official said.
Brown’s office did not respond to a request for comment.
Treasury Secretary Janet Yellen told Reuters on Friday that she believes Gruenberg’s successor should be free of any previous association with the FDIC’s workplace culture and take decisive steps to change the system.
“It needs someone committed to solving the problem,” she said. “It needs someone who can come in from the outside, who is credible in terms of his own past actions and his position on these types of issues.”
The White House is looking for someone outside the agency, Reuters reported Tuesday, and a candidate with the strong leadership qualities needed to solve the agency’s cultural problems, an administration official said Thursday.
Kristin Johnson, a Democratic member of the Commodity Futures Trading Commission (CFTC), is among the candidates, according to two people with knowledge of the matter. Bloomberg first announced the news on Thursday.
One of the sources also said an announcement could come next week.
The CFTC’s other Democrat, Christy Goldsmith Romero, Nellie Liang, a top Treasury Department official, Adrienne Harris, superintendent of the New York Department of Financial Services, and Sandra Thompson, director of the Federal Housing Finance Agency, are reportedly sources also a favorite among Democrats. other sources.
Representatives of the five declined or did not respond to requests for comment.
Inspector General Jennifer Fain said in a memo addressed to Gruenberg, dated Thursday and published Friday, that the watchdog “was made aware of several allegations of misconduct against senior FDIC officials that were not reported in a timely manner.”
Her office is investigating the allegations and investigating whether anything else went unreported, the memo said.
In response to a request for comment, the FDIC shared a message it sent to the OIG’s office this week, saying the agency looks forward to “coordinating and developing a process to promptly notify the OIG ” of alleged misconduct by senior FDIC officials. .
Although Gruenberg was not found directly responsible for the agency’s broad cultural issues according to the independent review, he apologized for misconduct under his leadership and for his own transgressions.
The Republican-led House Financial Services Committee announced Thursday that it had asked Gruenberg and other top officials to testify on June 12 about the independent investigation’s findings.
Should Gruenberg resign before a replacement can be appointed, the FDIC board would find itself in a 2-2 partisan deadlock, hampering the Biden administration’s bank regulation agenda.
(Additional reporting by David Lawder in Stresa, Italy; Editing by Michelle Price, Franklin Paul, Matthew Lewis, Chizu Nomiyama and Rod Nickel)
