Last month, the Senate Banking Committee discussed financial regulatory accountability and stability, focusing on issues within the Federal Deposit Insurance Corporation (FDIC), including mismanagement, racism, bullying, and sexual harassment problems. Chair Martin Gruenberg came under fire, with members calling for a change in leadership. President Biden appointed Christy Goldsmith Romero as Gruenberg’s replacement, with calls for a complete overhaul of the agency’s culture to ensure integrity and effectiveness.
Despite having women like Sheila Bair and Jelena McWilliams chair the FDIC, workplace problems persisted. The lack of diversity at the top, with no person of color ever leading the FDIC or the Office of the Comptroller of the Currency, has raised concerns. The blog argues that a broader issue of disdain for credit work has seeped into the financial mindset, impacting the FDIC’s ability to address workplace toxicity. The FDIC plays a crucial role in curbing credit market volatility and needs decisive leadership to operate effectively.
The decline of credit discipline became evident in the 1980s, with the rise of neoliberalism and the belief in efficient markets. This theory diverted attention from fundamental financial system risks and influenced financial professionals for decades. Even after the Global Financial Crisis, the FDIC Center for Financial Research propagated credit ideas from the Chicago School. The Federal Reserve focused on price to restore the financial system, while the FDIC worked behind the scenes to address the fallout from the credit market collapse.
Christy Goldsmith Romero’s profile as a change agent is highlighted for her experience in commercial litigation, credit, and market risk. Her work at the SEC and the Troubled Asset Relief Program gives her insights into credit ratings and financial industry practices. Romero’s focus on accountability and transparency, as seen in her heighted enforcement test at the CFTC, makes her a strong candidate to restore pride and mission at the FDIC. Her career path demonstrates agility and leadership, essential qualities needed to drive change in the FDIC’s culture and practices. If confirmed, Romero has the potential to bring much-needed reform to the regulatory body.
