Trump Holdover Jelena McWilliams to Step Down as FDIC Head

(Bloomberg) -- Federal Deposit Insurance Corp. Chairman Jelena McWilliams, a key bank regulator appointed by former President Donald Trump, will step down after clashing with officials installed by the Biden administration. 

McWilliams's resignation is effective Feb. 4, the FDIC said in a statement Friday. Her departure will remove an obstacle President Joe Biden and Congressional Democrats have faced in seeking to toughen oversight of banks and other financial firms. 

McWilliams's term was set to expire in 2023. FDIC board member Martin Gruenberg, a Democrat, is now set to become acting chair.

“It has been a tremendous honor to serve this nation, and I did not take a single day for granted,” McWilliams said in a resignation letter to Biden. “The unexpected shock of Covid-19 tested the resilience of our financial system beginning in March 2020, and the FDIC took swift actions to maintain stability and provide flexibility for banks and consumers. The core of our financial system not only weathered the storm, but was a tangible source of strength for the American economy.”

McWilliams was at the center of an unusual tussle this month with Gruenberg and Consumer Financial Protection Bureau Director Rohit Chopra. 

Gruenberg and Chopra had announced that the two agencies planned to launch a review of bank mergers. McWilliams then followed with her own statement, saying the FDIC hadn't approved such a move. The dust-up revealed an emerging rift between financial regulators and spurred speculation that the Biden administration might try to push McWilliams out. 

Read more: U.S. Bank Regulators Tussle Over Effort to Scrutinize Mergers

Most major bank rules are implemented in tandem by the FDIC, the Federal Reserve and the Office of the Comptroller of the Currency. Once McWilliams departs, it should be easier for financial watchdogs to impose tougher regulations.

Yet, the political wrangling over the FDIC may continue. 

On Friday, Representative Patrick McHenry, the senior Republican on the House Financial Services Committee, said the recent fight atop the agency and McWilliams' exit “raises serious concerns about the continued independence of the FDIC.”

Gruenberg “is not a suitable replacement,” McHenry said in a statement, calling for Biden “to fill this vacant seat with a leader in Jelena's mold.”

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