What has been described as both “open lawlessness” and a “partisan brawl” came to an end Friday when Federal Deposit Insurance Corporation Chair Jelena McWilliams — an appointee of former President Donald Trump — revealed she is resigning, which will give Democrats control of the agency.
In a letter to President Joe Biden published on the FDIC’s website, McWilliams said she intends to step down effective February 4, 2022. Politico pointed out that her resignation “means that FDIC board member Martin Gruenberg will become acting chair, his third stint atop at the 88-year-old agency, which insures trillions of dollars in deposits at the nation’s banks.”
Noting McWilliams’ recent conflict with the three Democrats on the five-member board — which already had one vacancy — the Revolving Door Project at the Center for Economic and Policy Research said that her departure is “good news for financial stability, and the rule of law,” as well as “a victory for democracy and a blow to Trumpism.”
The Open Markets Institute also welcomed her resignation, highlighting that it comes after she tried and failed “to subvert a democratic vote of the FDIC board to review bank merger policy.”
Although McWilliams’ letter did not mention the controversy, as Politico detailed:
Earlier this month, the Democratic majority on the FDIC’s board voted to take public feedback on potential changes to the agency’s bank merger approval process. McWilliams did not participate in the vote, and the FDIC in an official statement said the action was not valid. A legal debate ensued over whether a majority of the board can put items up for a vote without the consent of the chair, with Democrats maintaining they had clear authority.
At a board meeting that was livestreamed, McWilliams rejected a bid by Consumer Financial Protection Bureau Director Rohit Chopra—an FDIC board member and ally of Sen. Elizabeth Warren (D-Mass.)—to add a record of the vote to the FDIC’s official minutes.
Later, in an op-ed in the Wall Street Journal, McWilliams referred to the episode as a “hostile takeover.”
Todd Phillips, director of financial regulation and corporate governance at the leftist think tank the Center for American Progress and formerly an attorney for the FDIC, argued in November that McWilliams was failing on climate and “the other members of the FDIC’s board of directors have the inherent authority to take control of the agency; they need only to demonstrate the will to do so.”
The New York Times reported earlier this month that while some progressives — such as Sen. Sherrod Brown (D-Ohio) — emphasized that the Democratic FDIC members’ action “was not simply a power grab and that they really did care about bank mergers,” Phillips had framed it as a test for McWilliams.
“This is the first shot across the bow, seeing what the chairman’s response might be,” he said. “If they do end up being victorious on this issue, I think we’ll see the progressive directors throwing their weight around to move the FDIC in a direction that it hasn’t been in the past few years.”
Max Moran, research director at the Revolving Door Project, called out some media outlets — including by the Times and Politico — in an opinion piece for The Hill last week, accusing them of covering the “hugely consequential standoff” like “another partisan soap opera, with an aggrieved Republican on one side… and an ambitious interloper on the other.”
“McWilliams and Chopra both make compelling characters, but only one is quite clearly violating the law, and attempting to seize absolute power over a crucial agency with no repercussions,” Moran wrote, outlining the recent events with alarm.
Jeff Hauser, who leads the Revolving Door Project, tweeted Friday that McWilliams’ resignation “is basically a confession.”
“Reminder: This had to happen eventually,” Hauser said. “The extent to which early coverage of McWilliams’ lawlessness was positive was INFURIATING — she had ZERO legal justification for her coup. Hope all Trumpist Big Lies are treated less credulously in 2022!”