Exclusive: Rep. Andy Barr blasts FDIC’s ‘failed leader,’ outlines plans to reform America’s financial system

The chair of the Federal Deposit Insurance Corporation (FDIC) skipped out on testifying this week about his department’s sexual harassment and discrimination scandals — further angering the bipartisan coalition calling for his immediate resignation. 

FDIC Chairman Martin Gruenberg announced he would skip his voluntary hearing before the Financial Services Committee days before it was slated to occur. Rep. Andy Barr (R., Ky.) spoke with the Washington Reporter about Gruenbergs’s “failed” tenure.

“Marty Gruenberg is a total disgrace, he’s a failed leader, he’s a liberal political hack who has no business running any organization, let alone the premiere banking organization in America,” Barr said, referencing the FDIC’s latest scandal in which an independent investigation into the agency’s leadership found that “for far too many employees and for far too long, the FDIC has failed to provide a workplace safe from sexual harassment, discrimination, and other interpersonal misconduct.”

Even Democrats have pressed for varying degrees of reform since the investigation emerged. Barr told the Reporter that “If any regulated depository institution had the toxic workplace culture that [Gruenberg] has presided over at the FDIC, the FDIC would have crucified the management and leadership of that bank. The hypocrisy from Washington is something that Americans hate. And Marty Gruenberg is the poster child of Washington arrogance, mismanagement, and bureaucratic hypocrisy.”

Gruenberg is the longest-serving FDIC board member in the agency’s history and has been at FDIC since 2005. He said he would resign once his successor is confirmed, which could take months.

Barr, however, told the Reporter that Gruenberg should have been gone “yesterday,” adding that “it’s a disgrace that these Biden bureaucrats hold the private sector to one standard, but they hold themselves to another standard. It’s a double standard that Americans should not and do not tolerate. That’s why he should resign. He should have resigned several months ago, when the independent report was released.”

Barr also detailed reforms for the banking system, which include reforming the FDIC and the Consumer Financial Protection Bureau (CFPB). 

“We need to reimagine the FDIC,” he told the Reporter. “I think deposit insurance is important for financial stability. But I’m not sure the FDIC needs to be the primary regulator of a lot of financial systems. I think they could be a more targeted role for just administering deposit insurance, as opposed to being the principal prudential regulator.”

Barr also told the Reporter that “we should be ready, willing and able to use the Congressional Review Act on any number of misguided regulatory proposals from the administration and financial regulation and otherwise.” The FDIC, Barr noted, is a proxy for the CFPB — so he wants “reforming the FDIC [to] work in tandem with reform of the CFPB.”

While the Supreme Court recently ruled on the unconstitutionality of the CFPB’s structure, Barr noted that “the lack of accountability and transparency at the CFPB persists.” 

Barr, a lawyer, said that he believes “that the funding of the [CFPB] is still subject to challenge on different grounds now, because the Fed has been operating at a loss since September 2022 because of higher interest rates, and the Dodd-Frank statute does not permit the Fed to remit funds to the bureau, except in cases of surplus.”

Reforms would help the FDIC return to its roots “as a professional organization with a professional reputation,” Barr added. 

Below is a transcript of the Washington Reporter’s interview with Rep. Andy Barr, lightly edited for clarity.

Washington Reporter:
What’s the latest with the FDIC? Marty Grunberg is not leaving. What else is coming down the pipeline for you?

Andy Barr:
Marty Gruenberg is a disgrace. He’s a total disgrace. He’s a failed leader. He’s a liberal political hack who has no business running any organization, let alone the premier banking regulator in America. And the mismanagement and the poor leadership that he’s demonstrated in his most recent tenure is grounds for immediate removal in that position and the fact that he has pledged to “resign” until a replacement is found is woefully inadequate. He needs to go yesterday. If any regulated depository institution had the toxic workplace culture that he has presided over at the FDIC, the FDIC would have crucified the management and leadership of that bank. The hypocrisy from Washington is something that Americans hate. And Marty Gruenberg is the poster child of Washington arrogance, mismanagement and bureaucratic hypocrisy.

Washington Reporter:
Tell me how you really feel about this guy.

Andy Barr:
That’s how I feel about it. And I think it’s a disgrace that these Biden bureaucrats hold the private sector to one standard, but they hold themselves to another standard. It’s a double standard that Americans should not and do not tolerate. That’s why he should resign. He should have resigned several months ago, when the independent report was released.

Washington Reporter:
What has your committee’s working relationship with Gruenberg been?

Andy Barr:
He’s already come and testified in front of us. He’s been invited to come back in a second panel. We have a first panel including Acting Comptroller Michael Su. I happen to like Michael Su personally, but he has inexplicably come to the defense of Marty Gruenberg which is really a stain on Comptroller Su’s reputation. I don’t know why he’s defending this guy. We’re gonna have him, we’re also gonna have the law firm that conducted the report and also I believe we have another member of the FDIC board. I think the reason why Greenberg will not resign is just because of hard partisan political reasons. They don’t want a Republican to run that agency. Gruenberg’s trying to evade personal responsibility for his own misconduct. 

Rohit Chopra is slated for this week. He’s going to come and testify. Especially now with the Supreme Court’s decision upholding the structure of the CFPB, we’re gonna make the case that regardless of the Supreme Court’s decision, that the bureau needs reform. 

The lack of accountability and the lack of transparency at the CFPB persists. The urgency with which we have to act to reform it is even greater now that the Supreme Court has upheld the structure. I do believe that the funding of the bureau is still subject to challenge on different grounds now, because the Fed has been operating at a loss since September 2022 because of higher interest rates, and the Dodd-Frank statute does not permit the Fed to remit funds to the bureau, except in cases of surplus. Because they’ve been operating at a loss, my position is that, and the position of many commentators, is that any actions taken by the CFPB after September of 2022, when the Fed began operating at a loss are invalid actions by the CFPB because they were taken with funds improperly remitted by the Fed.

Washington Reporter:
If Republicans keep Congress, what is your top priority on the Financial Services Committee in terms of reversing some of FDIC policies next Congress?

Andy Barr:
The FDIC is a proxy for the CFPB for community banks. And so I think reforming the FDIC should work in tandem with reform of the CFPB because the FDIC does the CFPB’s bidding a lot of times especially with respect to smaller depositories. So that’s number one. Number two is, I think we need to be bold. I think we need to reimagine the FDIC. I think deposit insurance is important for financial stability. But I’m not sure the FDIC needs to be the primary regulator of a lot of financial systems. I think they could be a more targeted role for just administering deposit insurance, as opposed to being the principal prudential regulator. That’s something we ought to consider.

Washington Reporter:
If President Trump comes back into the White House in January, what would you like to see from a second Trump term in terms of changes in the FDIC?

Andy Barr:
The FDIC is set up, it’s supposed to be, a bipartisan or nonpartisan professional regulator of depository institutions and the administrator of deposit insurance in this country and it needs to be restored as a professional organization with a professional reputation. So there’s a lot of cultural changes that obviously need to take place there. There needs to be new leadership and a fresh start so that those changes can be implemented. I think that’s number one. And then number two, I think we should work with the new Trump administration to reimagine how the FDIC fits within the ecosystem of financial regulators. One of the complaints that I get a lot from financial firms and banks is that there are too many regulators and there’s a lack of regulatory coordination. I think we need to look at the redundancy and the duplication of efforts and streamline regulatory compliance so that regulated entities know that they’re only going to have to deal with one regulator instead of five or six.

Washington Reporter:
Is it reasonable for congressional Republicans, now or after the election, to use the Congressional Review Act to remedy the FDIC’s waywardness?

Andy Barr:
Of course we should be ready, willing, and able to use the Congressional Review Act on any number of misguided regulatory proposals from the administration and financial regulation and otherwise. What I would add to that is that those resolutions disapproving misguided and costly and bureaucratic rules and regulations from the Biden administration can work in tandem with litigation. In light of the West Virginia vs. EPA case, and perhaps the Supreme Court’s decision that if it does overturn Chevron will also help us invalidate any of these costly regulations.