Key Democrat backs embattled US FDIC chief amid harassment scandal

(Reuters) - Maxine Waters, the top Democrat on the U.S. House Financial Services Committee, expressed dismay on Thursday at reports of sexual misconduct and other workplace problems at the U.S. Federal Deposit Insurance Corporation but stopped short of calling for the chair's resignation.

An outside review released on Tuesday found the agency needed to adopt sweeping changes to fix workplace culture and address harassment, racial discrimination and other longstanding problems, citing accounts from more than 500 people, mostly current staff.

THE TAKE

Republican lawmakers since November have angrily called for FDIC Chair Martin Gruenberg to resign in the wake of the Wall Street Journal expose which prompted the investigation, conducted by the law firm Cleary Gottlieb Steen & Hamilton.

Support from Waters, a key Democratic player in congressional oversight of the agency, which is charged with helping ensure the stability of the U.S. banking system, will be crucial in helping Gruenberg survive calls for his ouster.

Waters said the statement had unfairly focused on Gruenberg to the exclusion of others who have held the chair of the agency's board during the period scrutinized by the review.

Senator Sherrod Brown, the Democratic chair of the U.S. Senate Banking Committee, has likewise refrained from calling for Gruenberg's removal, which could imperil the Biden administration's financial regulatory agenda.

KEY QUOTE

"Chairman Gruenberg must work diligently to fix what is broken at the FDIC and to restore the trust of employees in his leadership and in the organization," Waters said in her statement.

"Unfortunately, the Cleary report diverts attention from the longstanding institutional challenges confronting the FDIC by spotlighting allegations of temperament raised against only one of three individuals who held the Chairmanship of the FDIC during the matters addressed in its review."

(Reporting by Douglas Gillison; Editing by Aurora Ellis)