Report Finds Toxic Culture Permeates FDIC, Chairman Faces Resignation Calls
A bombshell independent report reveals a toxic culture at the Federal Deposit Insurance Corporation (FDIC), where harassment, bullying, favoritism, retaliation, discrimination, and other prohibited personnel practices were tolerated. Alleged perpetrators even received promotions.
Calling the FDIC a “good ol’ boys club,” law firm Cleary Gottlieb said the agency promotes a culture that is “patriarchal, insular and risk-averse" where favoritism is common and “senior executives with well-known reputations for pursuing romantic relations with subordinates enjoy long careers without any apparent consequence.”
The law firm was hired to conduct the independent review after a Wall Street Journal investigation in November detailed some of the incidents at the FDIC. For the report, Cleary Gottlieb interviewed more than 500 FDIC employees, most of whom are still working at the agency, which is an independent agency charged with maintaining stability and public confidence in the financial system.
Brazen Misconduct
The report contains a slew of examples of brazen misconduct on the part of FDIC employees.
Among the incidents described:
One female worker said she feared for her physical safety after a colleague stalked her and continued to text her, including sending texts with partially naked women engaging in sex acts, even after she made a complaint about him.
A Hispanic employee was asked by a colleague to recite the Pledge of Allegiance to “prove that they were American.”
A male supervisor in a field office routinely talked about his female employees' breasts and legs, as well as his sex life.
A senior bank examiner sent a text of his genitals out of the blue to a woman examiner while she was serving on detail in a field office.
Another senior bank examiner was known for going to brothels with colleagues during work trips.
Workers who are part of underrepresented groups were told by colleagues that they were "only hired" because of they were members of those groups, and told they were "token" employees hired to meet a quota.
FDIC Chair Under Fire
The report did not find FDIC Chairman Martin Gruenberg to be a “root cause of the sexual harassment and discrimination in the agency,” noting that a lot of the behavior predated Gruenberg’s chairmanship, which began in 2021.
However, the report noted that “culture starts at the top” and detailed tense exchanges that Chairman Gruenberg had with employees, including some where the chairman lost his temper.
In one such meeting, the chairman ranted for 45 minutes on bank failures and threatened to “fire” or “reassign” anybody he wanted. Attendees described the meeting as “embarrassing and inappropriate” and said the chairman made employees feel “disrespected, disparaged and treated unfairly.”
Republicans are calling for Gruenberg to resign. Some Democrats so far have called for his resignation, while others have held back.
If the Chairman does resign, that would leave the FDIC board deadlocked at two Democrats and two Republicans, effectively hamstringing the agency from making policy.
While not making a recommendation on whether Chairman Gruenberg should resign, Cleary Gottlieb did note that if Chairman Gruenberg continues the job, the prior instances “may hinder his ability to establish trust and confidence in leading meaningful culture change.”
In a letter to employees, Chairman Gruenberg apologized.
“To anyone who experienced sexual harassment or other misconduct at the FDIC, I again want to express how very sorry I am. I also want to apologize for any shortcomings on my part,” wrote Chairman Gruenberg, who also promised to implement recommendations from the report.
Those include transforming the culture across the agency, better protecting victims, and holding leadership more accountable.
