DOJ Backs Democrats in FDIC Board Struggle

The Department of Justice has sided with the Federal Deposit Insurance Corp.'s board over its former chair. 

The department of legal counsel at the Department of Justice has released an opinion stating that the chairperson can't prevent a majority of the FDIC board from presenting items for a vote and decision. 

Credit unions watched the drama with interest given that some feared the fight may devolve into a legal quagmire that could bring joint policymaking among the federal bank regulators to a standstill. The issue at hand also focused on bank mergers, which could trickle down to credit unions.

"The Chairperson of the Federal Deposit Insurance Corporation does not have the authority to prevent a majority of the FDIC Board from presenting items to the Board for a vote and decision," according to the DOJ opinion. 

The issue came to a head at the end of last year, when then-board member Martin Gruenberg, along with Consumer Financial Protection Bureau Director Rohit Chopra and acting Comptroller of the Currency Michael Hsu, moved forward with its review of bank merger policy without the approval of then-Chair Jelena McWilliams. 

McWilliams, at the time, said that the Democratic policymakers didn't have the authority to place an item on the FDIC board's meeting agenda, or to circulate it for a vote. In the aftermath of the scuffle, McWilliams resigned from the agency and Gruenberg became acting chairman.