Gruenberg Grilled on Both Sides

Democrats today were surprisingly scathing about FDIC Chair Gruenberg’s continued service, with Reps. Pressley (D-MA), Velázquez (D-NY), and Foster (D-IL) making clear they had lost confidence in him.  Ranking Member Waters (D-CA) tried to pin the blame at least as much on Mr. Gruenberg’s predecessors, but Rep. Meeks (D-NY) and others were more focused on Mr. Gruenberg, with Rep. Garcia (D-TX) getting him to agree to anger management training.  Republicans were united in blistering statements, with HFSC Chair McHenry (R-NC) closing the hearing by saying that he might convene another hearing solely on the FDIC chair given Democratic concerns about the need to focus more on the FDIC than possible given the overall regulatory agenda.  One major focus nonetheless was of course on the end-game rules, with Republicans trying to get FRB Vice Chair Barr to agree that the rule needs to be re-proposed given plans for material changes.  Mr. Barr refused to do so or to say when the QIS will be released beyond indicating that it should be in the near term.  Mr. Barr also would not outline his view on the new incentive-compensation proposal (see FSM Report COMPENSATION38) when pressed to do so by Rep. Velázquez.  We will defer a forecast of how Mr. Gruenberg is likely to fare until after tomorrow’s Sente Banking hearing, which will surely be as tough and may perhaps indicate additional sentiment that Mr. Gruenberg resign.  Should he continue to refuse to do so as he did today, it will fall on the White House to dismiss him; we continue to believe the President will do so only if more damning evidence directly linked to Mr. Gruenberg surfaces.