FDIC chairman appointed by Trump resigns

Federal Deposit Insurance Corp. (FDIC) Chairman Jelena McWilliams, a Trump appointee, resigned Friday amid a power struggle with Democratic members of the agency’s board.

In a letter to President Biden released Friday, McWilliams announced she would step down from the FDIC on Feb. 4, less than four years after she was confirmed by the Senate to lead the bank regulator.

McWilliams’s unexpected resignation came weeks after Democratic directors on the FDIC board attempted to launch a review of bank merger standards without her approval. While McWilliams ostensibly controlled the FDIC board, she was the sole Republican countering three Democratic directors: Former FDIC Chairman Martin Gruenberg, Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra and Acting Comptroller of the Currency Michael Hsu.

In a op-ed for The Wall Street Journal, McWilliams denounced the Democratic directors for launching “a hostile takeover” of the FDIC. Republican lawmakers also condemned the Democratic FDIC directors for an unprecedented breach of nearly nine decades of collegiality among agency leaders. Democrats, including the White House, insisted that McWilliams must yield to the will of the FDIC majority.

Putting partisanship & ideology over what was best for the @FDICgov & depositors, Chair McWilliams started a political fight she couldn’t win. Now, rather than work cooperatively & collegially in the best interests of the organization, she has resigned: https://t.co/UAvlKrrgoY

— Dennis Kelleher (@DennisKelleher) December 31, 2021

“Putting partisanship & ideology over what was best for the [FDIC] & depositors, Chair McWilliams started a political fight she couldn’t win. Now, rather than work cooperatively & collegially in the best interests of the organization, she has resigned,” tweeted Dennis Kelleher, president and CEO of Better Markets, a nonprofit supporting stricter financial regulations.

A former bank executive and legislative aide, McWilliams had led the FDIC since June 2018. She was one of several bank regulators appointed by Trump to loosen and streamline the strict rules imposed after the 2007-08 financial crisis through the Dodd-Frank Wall Street reform law.

McWilliams immigrated to the U.S. from Serbia during the early 1990s breakup of Yugoslavia, attended the University of California, Berkeley and practiced law at several high-profile firms. She served as chief counsel for Republicans on the Senate Banking Committee and the executive vice president for Fifth Third Bank before she was appointed to lead the FDIC.

Her story of coming to America to pursue her dream stands as an inspiration to us all. A total class act who always sought balance—much to my chagrin at times. The FDIC cannot operate where the minority is not represented. https://t.co/k4g1AVW7R0

— Richard Hunt (@cajunbanker) December 31, 2021

“Her story of coming to America to pursue her dream stands as an inspiration to us all,” said Richard Hunt, president and CEO of the Consumer Bankers Association, a trade group for banks.

“A total class act who always sought balance—much to my chagrin at times. The FDIC cannot operate where the minority is not represented,” he added. 

McWilliams’s resignation gives Biden a chance to install a new FDIC chief in line with the industry-skeptical financial regulators he has already appointed. Biden’s choice will almost certainly face intense opposition from Republican senators, and the president has a narrow margin for error in the 50-50 Senate.

Biden must also appointee nominees for two vacant FDIC director positions, including the one held on an interim basis by Gruenberg. Chopra and Hsu are de facto members of the FDIC board as CFPB director and acting comptroller of the currency, respectively.

Updated at 5:21 p.m.