Strengthening anti-redlining rules, addressing risks posed by climate change and reviewing bank merger rules are all priorities listed for the year ahead by the now-acting chairman of the board of the federal bank deposit insurance fund, as outlined Monday.
Martin J. Gruenberg is now acting chairman of the Federal Deposit Insurance Corp. (FDIC) Board, a position he held from 2012 to 2017. He has remained on the board even though his term ran out in 2018 (since no successor was nominated and confirmed by the Senate to take his seat). He replaced former Chairman Jelena McWilliams, who resigned from the agency Friday (Feb. 4).
As his first public action in the familiar seat, he announced the agency’s priorities for the coming year. Those listed by Gruenberg include:
- Strengthen the anti-redlining Community Reinvestment Act (CRA), asserting that the federal banking agencies plan to act jointly on a notice of proposed rulemaking “in the near future that would strengthen and enhance CRA.”
- Address financial risks posed by climate change, which he said will include seeking public comment on guidance designed to help banks prudently manage these risks, establishing an FDIC interdivisional, interdisciplinary working group on climate-related financial risks, and joining the international Network of Central Banks and Supervisors for Greening the Financial System.
- Review the bank merger process under the Bank Merger Act, which establishes the standards used by the federal banking agencies to consider bank merger applications and which, he said, has not been “comprehensively reviewed” in 25 years. (A disagreement between McWilliams and other members of the board emerged publicly, a rare happening, in December.)
- Evaluate crypto-asset risks; the banking agencies “will need to provide robust guidance to the banking industry on the management of prudential and consumer protection risks raised by crypto-asset activities.”
- Finalize the Basel III capital rule, which Gruenberg said would strengthen the regulatory framework for large banking organizations, including “strengthening the capital requirements related to market risk, operational risk, and the risks associated with financial derivatives.”
Gruenberg added that the priorities will require “close collaboration among the federal banking agencies,” which are now all headed by Democratic appointees or nominees.
“The FDIC’s core mission is to maintain stability and public confidence in the U.S. financial system,” Gruenberg said. “The FDIC carries out this mission through its responsibilities for deposit insurance, banking supervision, and the orderly resolution of failed banks, including systemically important financial institutions. Banking supervision encompasses safety and soundness and consumer protection, both of which are essential to this important mission.”
The five-member FDIC Board includes three persons nominated by the president and confirmed by the Senate: the chairman, vice chairman, and one member. The other two seats on the board are held by the comptroller of the currency (who heads up the Office of the Comptroller of the Currency [OCC], the regulator of national banks) and the director of the Consumer Financial Protection Bureau (CFPB).
Gruenberg, a Democratic appointee, is the only appointed member left on the board since McWilliams’ resignation last week. The vice chairman’s seat has been vacant since 2018, when the former occupant, Thomas Hoenig, resigned.
The acting chairman’s statement also recognizes McWilliams for her “contributions to the FDIC, in particular for her commitment, which I share, to diversity and inclusion and minority depository institutions.”