Gruenberg ’75 directs expanded FDIC
Martin J. Gruenberg '75, who was appointed chairman of the Federal Deposit Insurance Corporation by President Obama last November, presides over an agency whose powers have expanded greatly since the financial crisis of 2008. As Obama begins his second term and the country slowly recovers from the recession, Gruenberg suggested that his job as a financial regulator is more central to the administration's goals than ever.
The agency, which was created by the Glass-Steagall Act of 1933, is responsible for insuring the deposits of the nationís banks, regulating them and overseeing their bankruptcy.
In 2011, Gruenberg returned to the University to give a lecture titled "The FDIC's Response to the Financial Crisis" which explained the financial crisis from the agencyís point of view.
Before his appointment as chairman, Gruenberg served twice as the FDIC's acting chair and sat on its Board of Directors. Prior to his tenure there, he served in various regulatory roles on Capitol Hill and worked as senior counsel for Paul S. Sarbanes from 1993 to 2005.
Gruenberg earned a degree from the Woodrow Wilson School and was heavily involved with the Student Volunteer Council, doing social work in Trenton.
Gruenberg said that his time at the University had powerfully shaped his commitment to public service. "The whole ethic of Princeton in the nation's service as part of the University's mission resonated with me very deeply, and I think that really played a significant influence in my subsequent career which has really been entirely in public service," he said.
He also praised the University's resources and described Princeton as "the best university in the United States."
William Kuncik '75, a college friend of Gruenberg's who also helps organize Annual Giving for the Class of 1975 as class agent, remembers him as being "very politically interested and involved."
"He's the kind of person you would trust," Kuncik said. "He had a very high degree of integrity. He was very concerned with doing things the right way and following the rules the right way."
Gruenberg is an enthusiastic alumnus who is loyal to his alma mater, Kuncik said. He added from his knowledge as Class Agent that Gruenberg has donated money to Princeton virtually every year.
His enthusiasm also manifested itself in another way: Gruenberg was a central figure in the creation of the Princeton Prize in Race Relations in 2003, which is awarded annually to high school students who have shown their commitment to the cause of advancing race relations in the 21st century.
Henry Von Kohorn '66, the president of the Alumni Association, said Gruenberg was a part of the working group that figured out the mission of the prize, its name and its application process. He also contacted high school and community groups throughout Washington, D.C., where he worked, to spread word of the prize with brochures and applications.
According to Von Kohorn, Gruenberg even arranged for President Obama to speak at a prize-affiliated event.
"When you think of him as being a kind of bankers numbers guy, that doesn't even begin to describe what he's all about, because heís a very good human being," Von Kohorn said. "And he does what he says he's going to do."
While serving on the board of directors and later as acting chair and then chairman of the FDIC, Gruenberg watched the expansion of the agencyís responsibilities after the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010. The act gave the FDIC the power to manage the bankruptcy of major banks as well as their satellite institutions, a change that could perhaps strengthen the financial system so that the troubles of one bank will no longer threaten the system as a whole.
"The Dodd Frank Act gives the FDIC a very broad new authority to manage the failure of systemically important financial institutions," Gruenberg said, "and the big challenge of the FDIC is to now, with this broad new authority working through the law, to find the operational capability as well as a viable strategy for managing an orderly failure of these companies."
But the governmentís actions in the financial sector after 2008 were not universally well received. Indeed, both the Dodd-Frank Act and the original TARP bailout program have been criticized by both parties for having been too easy on the failing banks at the expense of the American taxpayer.
Gruenberg said he did not want to criticize the administration's past actions. "Hindsight is 20/20, so I'm inclined not to second-guess what was done." He also expressed cautious optimism at the ongoing recovery, citing the FDIC's internal indicators of the "steadily decreasing" number of failing banks since 2010.
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