- Sen. John Kennedy fiercely demanded acting FDIC Chair Travis Hill produce a 30-day report on addressing pervasive 2023 sexual harassment and discrimination findings.
- Kennedy vowed to block Hill’s confirmation without proof of accountability, echoing bipartisan frustration and calls for justice for affected women.
- FDIC faces broader risk: staffing cuts, bank failures, rising CRE delinquencies, and shrinking insurance fund, heightening oversight concerns.
WASHINGTON — In a heated exchange that underscored ongoing turmoil at one of the nation’s key financial watchdogs, a top Senate Republican on Thursday delivered a sharp rebuke to President Donald Trump’s nominee for permanent chairman of the Federal Deposit Insurance Corporation, demanding real action on a damning internal investigation into workplace abuse.
Sen. John Kennedy, a Louisiana Republican with a reputation for colorful takedowns, didn’t mince words during a Senate Banking, Housing and Urban Affairs Committee hearing.
He accused acting FDIC Chair Travis Hill — Trump’s pick to lead the agency that insures bank deposits and polices smaller lenders — of dragging his feet on reforms following a 2023 probe that uncovered “pervasive sexual harassment and discrimination” across the organization.”
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I’ve had enough of this,” Kennedy snapped at Hill, who has served as a senior aide and vice chair at the FDIC.
“And if your name came up in front of me right now, I wouldn’t vote for you. Got nothing to do with your policy chops, but I have had enough.”
The confrontation, first reported by Politico, highlights the precarious position Hill occupies amid a broader crisis of confidence at the FDIC.
The agency, born out of the Great Depression to restore faith in the banking system, has been rocked by scandals that could hobble its ability to oversee an industry already grappling with commercial real estate woes, cybersecurity threats and a handful of recent failures.
Kennedy, one of the committee’s more conservative voices, gave Hill an ultimatum: Deliver a detailed report within 30 days outlining how the FDIC has addressed the harassment claims and other misconduct allegations, or risk losing his support.
“Otherwise, you can forget about my vote,” he said.
Kennedy went further, vowing to block the nomination “until I’m convinced that they’re not going to sweep this under the rug — and that there’s going to be justice for these young women that they touched and harassed and tried to have sex with.”
Bipartisan Calls for Accountability
Hill, who has not been implicated in the misconduct himself, pushed back mildly, insisting that “reforming the culture continues to be a top priority” at the agency.
But his assurances fell flat with at least one Democrat on the panel. Sen. Elizabeth Warren of Massachusetts, a fierce critic of lax financial regulation, dismissed Hill’s response outright.
“There’s no record” of meaningful steps to fix the problems, she retorted, according to accounts from the hearing.
The episode comes at a tense moment for the FDIC, which is still reeling from the revelations of a 2023 external investigation.
That probe, triggered by whistleblower complaints, painted a picture of a toxic environment where female employees faced routine harassment, retaliation and a culture of impunity among senior leaders.
The fallout led to the resignation of former Chairman Martin Gruenberg earlier this year, amid bipartisan calls for accountability.
As Hill’s confirmation hangs in the balance, the FDIC faces mounting external pressures that could amplify the risks it was created to mitigate.
The Risks for Crisis “Are Greater Now”
Just this year, two small banks have already collapsed — Pulaski Savings Bank in Chicago, with $49.5 million in assets, and The Santa Anna National Bank in Texas, holding $63.8 million — bringing the total to four failures since late 2024.
Suspected fraud played a role in Santa Anna’s demise, costing the FDIC’s Deposit Insurance Fund an estimated $23.7 million, the agency said in a June release.
Those closures, while modest compared to the 2023 regional banking crisis that toppled giants like Silicon Valley Bank and Signature Bank, serve as stark reminders of vulnerabilities in the system.
The FDIC’s latest Risk Review, released earlier this year, flagged persistent headaches like weakening commercial real estate loan performance and elevated concentrations in that sector among smaller lenders.
Roughly 31% of all banks — or 1,374 institutions — were deemed “CRE-concentrated” at the end of 2024, with non-owner occupied CRE problem loans ticking up to a 4.65% delinquency rate in the first quarter of 2025, well above pre-pandemic levels.
Outgoing Chairman Gruenberg himself sounded the alarm in a January speech at the Brookings Institution, warning that many of the factors behind past crises — including under-regulated non-bank financial firms and ballooning uninsured deposits — persist today, if not worsened.
“In some respects, the risks are greater now,” he said, noting that the biggest banks are “bigger, more complex and more deeply intertwined than ever before.”
Uninsured deposits, which aren’t fully protected by the FDIC’s $250,000 coverage limit, now top $7 trillion, or over 40% of all banking deposits.
Layoffs Are Playing a Big Role in Risk Surge
Compounding these industry-wide concerns are internal woes at the FDIC itself. The agency’s Office of Inspector General warned in a March report that severe staffing shortages — exacerbated by hundreds of layoffs and resignations under the Trump administration — could jeopardize its core mission of spotting risks before they lead to failures.
“With fewer examiners but the same responsibility to conduct statutorily required exams in 2025, it may be difficult for the FDIC to complete these examinations by the end of the year,” the watchdog noted.
Attrition has hit especially hard among IT-savvy examiners needed to tackle cybersecurity threats, with the OIG highlighting a “brain drain” of advanced skillsets.
Financial risk consultant Mayra Rodríguez Valladares, who advises banks and regulators, didn’t hold back in a recent interview with NPR.
“This administration is really sowing the seeds for the next financial crisis,” she said, pointing to proposed cuts and even whispers of abolishing the FDIC altogether as part of broader deregulation pushes tied to Project 2025.
On the earnings front, regional banks — often the FDIC’s primary focus — are under the microscope too.
A Reuters analysis from late October noted investor jitters after several lenders disclosed bad loans and fraud issues, with the KBW Regional Banking Index down nearly 5% for the year while larger peers surged.
“Losses have been low, so these recent numerous larger loan problems have raised fears of a broader deterioration,” said Michael Driscoll, a credit rating officer at Morningstar DBRS.
Even as the FDIC’s insurance fund balance climbed to $140.9 billion in March — bolstered by assessment fees — projections show it dipping toward the statutory minimum of 1.35% by year’s end, leaving less of a buffer against potential failures.
And in a bid to sharpen its tools, the FDIC and the Office of the Comptroller of the Currency proposed in October to redefine “unsafe or unsound practices,” aiming to zero in on material threats like cyber and liquidity risks rather than minor procedural slips.
So, What Happens Next?
For now, Hill’s fate remains uncertain, with Democrats likely to oppose him en masse and Kennedy’s vote now in play.
As the hearing wrapped, the senator’s frustration lingered in the air — a microcosm of an agency, and an industry, desperate for steady leadership amid gathering storm clouds.
Whether the FDIC can clean house and refocus on its mandate will go a long way toward determining if 2025’s two failures are a blip or a harbinger.
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