Senate Appoints Martin Gruenberg as FDIC Chairman

The U.S. Senate has named Martin Gruenberg to his second term as FDIC chairman.

According to published reports, the Senate confirmed Gruenberg and named Republicans Jonathan McKernan and Travis Hill to the board of the Federal Deposit Insurance Corporation, bringing the regulatory body to full capacity.

Gruenberg, a Democrat, first joined the FDIC in 2005 and served as chair from 2012 to 2018. He had been acting chairman since the departure of the former chair, Jelena McWilliams, who stepped down earlier this year.

McWilliams resigned due to friction between the FDIC and the Consumer Financial Protection Bureau (CFPB) apparently over a review of banking mergers.

But McWilliams called the situation “unprecedented,” saying the conflict “isn’t about bank mergers” in an opinion piece in The Wall Street Journal.

“If it were, board members would have been willing to work with me and the FDIC staff rather than attempt a hostile takeover of the FDIC internal processes, staff and board agenda,” she wrote. “This episode is an attempt to wrest control from an independent agency’s chairman with a change in the administration.”

Since becoming acting chair, Gruenberg has named cryptocurrency asset risks as one of the FDIC’s key priorities.

He said he worries about insured federal banks getting into trouble if they “engage in crypto-asset-related activities,” potentially leading a contagion to infect the broader financial system and posing “significant safety and soundness and financial system risks.”

Gruenberg added that banking regulators must “provide robust guidance” to the industry on these risks, both to their own institutions and their clients.

In October, Gruenberg said American financial regulators will likely have stronger guidance for banks on cryptocurrencies once those agencies gain a better handle on the risks.

“We must understand and assess the risks associated with these activities the same way that we would assess the risks related to any other new activity,” Gruenberg said during an event at the Brookings Institution.

He added that a potential, stablecoin-based payments system should complement the Federal Reserve’s yet-to-be-unveiled FedNow Service, as well as a U.S. central bank digital currency (CDBC), assuming the U.S. launches one.

As PYMNTS noted earlier this year, banks have been reluctant to advocate crypto investments. A survey of private global banks done by the Basel Committee on Banking Supervision (BCBS) showed that just seven of 178 banks had direct cryptocurrency exposure.

While more than 100 of the banks carried out some crypto-related activity — like trading on clients’ accounts — none of the banks interviewed reported having direct cryptocurrency holdings as long-term investments.