A Deep Dive into the Unprecedented Wall Street Journal Attack on FDIC Chairman Martin Gruenberg

By Pam Martens and Russ Martens: November 21, 2023 ~

Martin Gruenberg, Chair, Federal Deposit Insurance Corporation (FDIC)

Martin Gruenberg, Chair, Federal Deposit Insurance Corporation (FDIC)

In seven of the past nine days, a Wall Street Journal article has been published attacking the culture of the bank regulator, the FDIC, and/or its Chairman, Martin Gruenberg, a Democrat and Biden nominee. The cumulative total of this attack so far is eight articles bylined by Rebecca Ballhaus (one was co-bylined with Andrew Ackerman); an unsigned Wall Street Journal video; and a podcast interview with Rebecca Ballhaus on her reporting about the FDIC and Gruenberg.

According to one Ballhaus article, the Wall Street Journal investigation included “interviews with more than 100 current and former employees, including more than 20 women who quit.”

The thrust of the unprecedented volume of articles in such a short span of time is that a culture of sexual harassment has existed for years at the FDIC, under both Republican and Democratic leadership. But after more than 100 interviews, the worst thing Bellhaus has come up with thus far regarding Gruenberg’s personal conduct is that he yelled at a female colleague for not consulting with him prior to scheduling his itinerary.

The sexual harassment complaints are no doubt real and there are likely more serious ones hidden away with settlement payments and non-disclosure agreements. That’s because the FDIC sends teams of male-dominated bank examiners off to far-flung cities to examine banks and the teams live in the same hotel and socialize for extended periods.

According to the reporting thus far, the worst of the sexual harassment complaints involving the FDIC run along these lines:

“Women recounted instances of being sent naked photos from senior bank examiners, hearing that their male supervisors were visiting strip clubs with male colleagues and being subjected to discussions of how women needed to use sex to get ahead at the FDIC. One woman said a male colleague followed her back to her hotel room during a training trip. Another woman said a colleague complained to her that he wasn’t having enough sex and said: “Obviously if I walked into this office and you were naked, I’d f— you right here.”

None of the allegations thus far involve allegations of sexual assault or rape – allegations that have been made by more than a dozen women against Donald Trump – the leading Republican contender for President of the United States.

We used the internal search function at the Wall Street Journal as well as Google Search to check on the Journal’s coverage of the sexual assault allegations against Donald Trump. We found just six articles in the past four years involving Donald Trump and an allegation of sexual assault. That’s two articles less than have appeared in the past nine days about Gruenberg and the FDIC where no allegations of sexual assault or rape have yet to be made.

So what’s really going on here?

Gruenberg is aggressively pursuing higher capital rules for the mega banks on Wall Street which pose systemic risk to the U.S. banking system. (No community bank would be impacted by the proposed capital rules.) Toppling Gruenberg from the Chairmanship of the FDIC would leave an evenly split vote by its Board when the FDIC votes on the new capital rules, with two Republican votes and two Democrat votes. Since it takes a majority vote to finalize a rule, the new capital rules would very likely not go forward – an outcome that Wall Street’s mega banks have heavily lobbied for and bankrolled with millions of dollars.

There is also some evidence that certain Republicans on the Senate Banking Committee and House Financial Services Committee are less than objective parties in efforts to discredit Gruenberg.

The first Wall Street Journal article on the FDIC/Gruenberg matter appeared in print on November 14 under the headline “Sex, Booze and Bank Regulation.” Conveniently, the Senate Banking Committee had scheduled a hearing that same day with federal banking regulators, including Gruenberg.

Repeatedly at the November 14 hearing, Republicans used the occasion to attack Gruenberg’s leadership at the FDIC and then those attacks were regurgitated in a news article at the Wall Street Journal.

During the hearing, Republican Senator Mike Rounds of South Dakota asked to enter a copy of the first Wall Street Journal article into the record of the hearing. He then said this, suggesting he had advance information on what the Journal planned to publish going forward:

Rounds: “After the publication of this report yesterday [on the digital version of the WSJ] I understand that, as you have stated for the Committee a few minutes ago, that you have informed the FDIC staff that the FDIC would hire an independent firm to conduct an assessment of these concerning allegations. It is also my understanding that there may be additional press reports coming as well. Are you going to be the object of any of these future reportings on this matter?”

Gruenberg replied that he couldn’t speak to that, that Senator Rounds would have to “speak to the news organizations.”

Senator Rounds prescience was remarkable. Two days later, this headline appeared on the digital edition of the Journal: (Paywall) FDIC Chair, Known for Temper, Ignored Bad Behavior in Workplace.

Ginning up the hysteria to oust Gruenberg from the FDIC are Republican Senators John Kennedy of Louisiana and Republican Senator Joni Ernst or Iowa. The Journal dutifully reported those calls for Gruenberg to resign.

On November 17, this announcement appeared at the Republican-controlled House Financial Services Committee: “Financial Services Committee Republicans Launch Investigation into Gruenberg Misconduct, Toxic Workplace at FDIC.”

The editorial page of the Wall Street Journal has a long history of attacking regulators when they attempt to rein in the toxic and corrupt culture at Wall Street mega banks. On October 20, 2013, a month before JPMorgan Chase settled with regulators for $13 billion over its packaging of toxic mortgages which it had peddled to unwary investors, the Wall Street Journal editorial page ran an editorial headlined “The Morgan Shakedown.” It accused regulators of “confiscating roughly half of a company’s annual earnings for no other reason than because they can and because they want to appease their left-wing populist allies.”

The month prior, on September 27, 2013, the Wall Street Journal ran the headline “Robbery at J.P. Morgan” over an unsigned editorial. The thrust of the editorial was this: “Government lawyers are backing up the truck again at J.P. Morgan Chase to extract another haul from the country’s largest bank.” And, mind you, it’s not because J.P. Morgan has broken the law or done anything seriously wrong, it’s because the bank is the “Obama Administration’s favorite Wall Street target” because of its independent-thinking CEO, Jamie Dimon, who “keeps deviating from the Obama script.”

The very next year, 2014, JPMorgan Chase admitted to its first two felony counts with the U.S. Department of Justice for facilitating Bernie Madoff’s Ponzi scheme by providing banking services to him for decades without filing the legally-required Suspicious Activity Reports. The bank shared its suspicions with U.K. regulators that Madoff was running a Ponzi scheme but failed to mention that pesky detail to regulators in the United States. Over the next six years, the Wall Street mega bank would admit to three more criminal felony counts while keeping the same Chairman and CEO, Jamie Dimon, in place.

The Wall Street Journal has yet to speak out on why Jamie Dimon is allowed to keep his job at the largest bank in the United States despite a rap sheet that rivals the Gambino crime family.

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