White House Goes Back to the Future With FDIC Chair Pick Gruenberg

by Abiodun Oladokun
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White House Goes Back to the Future With FDIC Chair Pick Gruenberg

Jesse Hamilton is CoinDesk's deputy managing editor for global policy and regulation. He doesn't hold any crypto.

President Joe Biden has chosen to nominate Federal Deposit Insurance Corp. (FDIC) Acting Chairman Martin Gruenberg to return to the chairmanship he held in previous administrations.

Gruenberg, who has served on the FDIC board for a record 17 years after working for Democrats on the Senate Banking Committee, has been a reliable proponent of tougher financial rules, though his position on cryptocurrencies hasn’t been fully fleshed out. In an October speech on crypto issues, he said stablecoins could have such a profound effect on the banking system that U.S. regulators need to make sure the digital tokens fit in without disruption.

Under Gruenberg’s leadership as the interim head of the board, which has continued long after his own board term expired at the end of 2018, the FDIC also went after some crypto firms – including the now-disgraced FTX – that the agency claimed misrepresented how customers may be protected by deposit insurance.

The FDIC will have a key role in how crypto will mesh with the U.S. banking system. That work will have significant influence over how stablecoin rules are eventually implemented.

The White House sent Gruenberg’s nominations for his board seat and the five-year chairmanship to the Senate for confirmation on Monday. The so-called lame duck period of Congress, in which the last weeks of this session are completed before the newly elected members arrive in January, has begun. Narrow control of next year’s Senate will remain with Democrats.

The Biden Administration has had a mixed record of getting its financial regulator nominees through the Senate confirmation process. A pick for the Office of the Comptroller of the Currency, Saule Omarova, and one for the Federal Reserve’s bank-supervision role, Sarah Bloom Raskin, failed to reach a vote. But Michael Barr – a former adviser to Ripple – had at first faced pushback as a potential candidate to run the OCC, then won confirmation when he was nominated for the Federal Reserve job.

Gruenberg, who was confirmed previously as FDIC chairman in 2012, was embroiled in some controversy at the start of this administration when he and the Democratic chief of the Consumer Financial Protection Bureau sought to move a bank-merger policy without support of the FDIC chairman at the time, Jelena McWilliams. McWilliams subsequently resigned.

Sen. Elizabeth Warren (D-Mass.) praised the Gruenberg pick, saying he “has spent his entire career fighting for American consumers, and he is well equipped to continue defending the banking system from new and existing threats.”

However, the Conference of State Bank Supervisors pointed out that nominating him means “none of the nominees to the FDIC Board will meet the requirement for state bank supervisory experience.” Biden had previously nominated Travis Hill as vice chairman and Jonathan McKernan as a board member, which would fill out the five-member board.

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