By Pete Schroeder

WASHINGTON (Reuters) -Senate Banking Committee Chairman Sherrod Brown called for new leadership at the troubled Federal Deposit Insurance Corporation Monday, urging President Joe Biden to immediately nominate someone to replace current Chairman Martin Gruenberg.

In a statement, Brown said there must be “fundamental changes” at the agency, after an external review found sweeping reports of employee mistreatment and sexual harassment. He said he wanted the Senate to act “without delay” on any nominated replacement.

The request is a major blow to Gruenberg’s efforts to stay on atop the bank regulator, as Brown is the most senior Democrat thus far to call for his replacement.

Spokespeople for the FDIC and White House did not immediately respond to a request for comment.

Last week, Gruenberg testified alongside several other banking regulators before Congress. There, he vowed to take steps to address longstanding cultural issues at the agency, as well as his own personal conduct, after the review found multiple instances where he lost his temper with subordinates.

But he faced skepticism from members of both parties, wary of his ability to overhaul an agency where he had served for nearly two decades.

After chairing last week’s hearing, reviewing the independent report, and receiving further outreach from FDIC employees to the Banking and Housing Committee, I am left with one conclusion: there must be fundamental changes at the FDIC. Those changes begin with new leadership,” said Brown in a statement.

Notably, Brown did not call for Gruenberg to immediately resign, as many Republicans in Congress have. Should Gruenberg leave the agency without a confirmed replacement, leadership of the FDIC would fall to Travis Hill, the agency’s vice chair and a Republican. The agency would then be deadlocked 2-2.

The FDIC is working with the Federal Reserve and Office of the Comptroller of the Currency on several rulewriting projects that would tighten requirements on larger banks. That agenda could be imperiled should Gruenberg leave the agency without a replacement.

(Reporting by Pete Schroeder and Douglas Gillison, Editing by Franklin Paul)